Web Is Bright Spot for Gloomy News Corp., But Sites Vulnerable

News Corp.’s digital properties were a bright spot in an otherwise gloomy fiscal Q1. During the most recent quarter, the company’s net income fell 30 percent while Fox Interactive Media turned in revenue of $220 million, a 17 percent increase.

But the digital horizon is now clouding up too, as executives admit weak demand for display ads has begun to take a toll on MySpace and other sites.

“It’s clear from everybody else that there is a lot of softening in the display advertising marketplace and we are beginning to feel some of that,” said President and COO Peter Chernin, according to a transcript on SeekingAlpha.

FIM’s results last quarter were helped by a 16 percent lift in display ad sales and a 10 percent increase in search revenue, according to CFO Dave DeVoe. During the quarter MySpace rolled out two important initiatives, MySpace Music and MyAds. The latter is a self-serve ad buying system geared toward bands and small businesses.

Meanwhile, Chairman and CEO Rupert Murdoch said WSJ.com brought in more than $100 million in advertising, compared with $100 million in subscriptions. He hailed the site’s subscription model, which he at one time considered scrapping: “The one Web site that people charge for, people are very happy to pay for.”

Following the earnings release, News Corp. lowered its overall guidance. Whereas in August it said fiscal 2009 profits would increase 4 to 6 percent, it now believes they will decline by a percentage in the “low-to-mid teens” from the $5.13 billion in net income the firm reported in fiscal 2008.