News Corp tries to hold onto Google deal

Three years ago, Google (GOOG) set up a deal with News Corp (NWS) to sell advertising on MySpace. The value of the arrangement was $900 million, to be paid to News Corp over three years.

Rumors are now circulating that Google did not do well in the transaction because the yield from MySpace ads was small. It is believed that Google will offer much less for an extension of the relationship.

News Corp may put access to more of its internet properties on the table, offering an improved arrangement to sell Google's search ads over a much broader audience.

According to Reuters, "News Corp hopes to sell Google Inc access to a greater swathe of its media properties." That might include the online properties of the successful Fox TV network.

No matter how many of the News Corp web properties are included in a new partnership, the company is likely to do much worse than the expiring $900 million deal. MySpace is by far the largest News Corp website based on users. If it has not performed well, Google is almost certain to cut its commitment.

News Corp's internet revenue is going to take a hit, and there is nothing the company can do about it.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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