Viacom to Challenge News Corp. in Social Networking Sites

MTV owner Viacom Inc. (VIA) plans to enter the business of connecting youth viewers on the Internet this year, a top Viacom executive said on Wednesday, amid threats of losing its cool cachet to News Corp. (NWS).

For MTV, once a music video cable channel that transformed into a global programming powerhouse, the fight to stay relevant with fickle young tastemakers on the Web has only just begun.

"We don't believe the game is over," said Tom Freston, chief executive officer of Viacom, at the Reuters Global Technology, Media and Telecoms Summit in New York.

"Really, it's just started," he said of the online hangouts.

Viacom has met with several of the handful of so-called Internet social networking businesses, but has not decided whether it would enter the market through partnerships or acquisitions.

"I would expect within this year you'll see some good social networking capabilities in our company," Freston said.

The move would pit the owner of MTV Networks, which defines the youth media market, against

Rupert Murdoch's News Corp. last year paid $580 million for the two-year-old, which has attracted some 56 million users to its site where teens and young adults convene to chat, share music and post web sites packed with content they create.

It has garnered the fourth highest number of visitors behind Yahoo (YHOO) and Microsoft (MSFT) and is neck and neck with Google (GOOG).


Freston said Viacom never bid on MySpace, despite rumors to the contrary, because its revenue at the time did not justify its purchase price.

News Corp has told investors MySpace generated fiscal 2005 revenue of about $47 million.

"It's a difficult business to maintain your vitality in," Freston said. "[But] that's not to say it can't be done.

That's one of the biggest problems News Corp. faces in its Internet strategy.

Turning chattering online teens into profits will not be easy.

"Everyone wants to know how you're going to monetize it," Freston said. "You're asking people to advertise between conversations between two people."

The task is tougher still with businesses designed to attract the media savvy youth market. "Look at your average 16 year old and they're a grizzled veteran of the media world," Freston said.

Then there's the matter of decency, a sensitive topic for Viacom, whose MTV-produced Super Bowl halftime show in 2004 drew criticism after singer Janet Jackson exposed one breast.

Social networking sites, where the Web pages are filled with user contributed text, pictures and video are tough to police. The phenomenal growth of MySpace and its popularity among youngsters has made it a magnet for sex predators.

The Connecticut Attorney General is investigating MySpace after reports of six or seven sex assaults were linked to the site.

MySpace has said it employs a staff to actively filter out pornographic material.

"[Advertisers] judge very harshly the kind of content they're advertising on," Freston said. "On television and radio, there are standards." is owned and operated by News Corporation, which also owns and operates