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New Corp scoops with e-mail film clip

September 2005

News Corp scoops with e-mail film clip

By Aline van Duyn in New York
Published: September 15 2005

If you’re female or old, you probably will not have heard of it and almost certainly will not have seen it. Yet Transporter 2 is a very important film. As well as setting a $20m record during its Labour Day opening weekend at the start of September, its success for Fox Filmed Entertainment was in large part due to internet marketing.

A day or so before the movie opened across the US, about 10m e-mails were sent out with an exclusive clip. The excerpt was of somebody being beaten up – and according to Tom Rothman, chairman of Fox Filmed Entertainment, "the click-through rates were pretty extraordinary".

"On the first weekend, we grossed more than the negative cost of the picture," he told investors this week. Mr Rothman put much of this down to the 10m e-mails, which were sent by Intermix, the internet company which owns the popular community site and other web properties.

Intermix was bought by News Corp, which owns the Fox, for $580m a few weeks before the release of Transporter 2. Indeed, News Corp has spent over $1.5bn on internet properties in recent months, including gaming and entertainment site IGN Entertainment this week.

"MySpace, IGN, these sites are bull's eye demographic partners for us," said Mr Rothman. With many films aimed at a "young audience, male gamers, etc", Mr Rothman is bullish about the purchases which have catapulted News Corp's internet reach from about 20m monthly users to over 70m.

Indeed, so far there are few critics of Rupert Murdoch's decision earlier this year to make the internet a priority for News Corp. Having shunned the growing internet sector following losses made on investments in the late 1990s, he realised he could no longer ignore the strong growth in internet advertising and the growing use of the internet by the audience he is trying to reach, from newspaper readers to movie-goers.

"News Corp was a little bit slow out of the gate, but recently they have made some very smart moves," said Kenneth Marlin, who advises companies on acquisitions. "In the near term one of the principal benefits is to leverage the ability to sell content and advertising on these sites."

According to Doug Mitchelson, analyst at Deutsche Bank, the concentrated audience of young males is a demographic "harder to reach through traditional media".

He said News Corp had now developed scale positions in internet sites covering entertainment, news and sports. "Remaining is tying the platform together with navigation, convenience and community features such as search, e-mail and blogging."

Mr Murdoch told his senior executives last weekend in Carmel, California, they must find ways to integrate their traditional publishing and broadcasting operations with News Corp's new internet assets. The company has set up a new group, called Fox Interactive Media, to manage the internet divisions.

Richard Greenfield, analyst at Fulcrum Global Partners, said it was unclear whether the internet acquisitions would create value for News Corp shareholders. However, he said it was positive that Mr Murdoch was willing to commit capital to the internet, which will be increasingly important to media companies. Indeed, News Corp is still in talks to buy other internet groups, including search company Blinkx.

Meanwhile, young men – as a group the biggest users of the internet for media and entertainment – are being captured by News Corp.

As well as getting them into movie theatres, the internet access recently acquired will boost DVD sales, a huge source of profits for News Corp.

"This is what they call the beauty part," Mr Rothman said. "With no other added advertising, we will sell about 200,000 DVDs of Transporter 1 in the two weeks surrounding [Transporter 2]."

Copyright 2005 Financial Times

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