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Fox's Chernin Critical of YouTube Anti-Piracy Efforts

4 Oct, 2007 By: Erik Gruenwedel

News Corp. owns 20th Century Fox Home Entertainment, MySpace and The Wall Street Journal.

The Wild West standoff has move to the digital arena.

Peter Chernin, president and COO of News Corp., which owns 20th Century Fox Home Entertainment, MySpace and now The Wall Street Journal, is on a non-stop quest to carve out as big a slice of the digital entertainment pie as possible.

And he's not afraid to take swings at the competition or shake up the status quo along the way.

Last week in a webcast interview with the Financial Times of London, Chernin criticized search behemoth Google Inc. for not doing “a better job” policing pirated video on its community Web site YouTube.

In March, Viacom filed a $1 billion copyright infringement suit against YouTube and Google, claiming more than 160,000 unauthorized video clips of Viacom content on the site.

Chernin said media accounts characterizing Hulu — News Corp.'s budding video sharing site with NBC Universal — as a reaction to YouTube were misunderstood. He denied that Hulu was intended to be a “YouTube killer.”

“YouTube is not dangerous to us at all with the exception that copyright violated content is made available there,” Chernin said. “I do believe YouTube could do a much more aggressive job taking down content that is copyright violated.”

The COO said MySpace was “significantly” more aggressive protecting copyrighted content. He denied YouTube lacked the technology to filter out illegal videos.

“I think it is pretty safe to say they have the technology,” he said. “I haven't heard a lot about Google being technologically constrained.”

Separately, Jeff Zucker, CEO of NBC Universal, said the U.S. Justice Department should increase its antipiracy efforts. In comments before the U.S. Chamber of Commerce, Zucker cited data from conservative think tank, Institute for Policy Innovation, that said piracy of intellectual property, including movie DVDs and music CDs, has cost the U.S. economy $58 billion in lost output and more than 370,000 jobs.

With a penchant for entrepreneurialism within News Corp. properties, Chernin was asked whether he worried about cannibalizing existing revenue streams for the sake of new technology.

He said while it was vital that News Corp. aggressively open up new markets in ways that aren't margin destructive. He said creating new business that doesn't destroy an existing higher margin existing business wasn't easy.

“I would say it is the primary question to wrestle with,” he said. “A lot of the existing business will go through various evolution cycles. And the real key is to build new businesses faster than the old ones may decline.”

Chernin said he wasn't worried about the burgeoning success of social networking Web site Facebook, which reportedly has outpaced MySpace in some countries.

“I have a healthy level of paranoia and respect for Facebook,” he said. “And I admire and respect a lot of what they are doing. Like most things in life, competition is a very valuable thing. [Facebook] has garnered our attention.”

He said MySpace continues to outpace Facebook “on any metric” in terms of growth, page views, unique visitors and time spent on the site. He said the user-generated content on social networking sites continue to be a fast moving and evolving market.

“[Facebook has] done a good job, and they deserve kudos for that job,” Chernin said. “I think it is good to have a competitor. It's such a dynamic fast growing area that we need to constantly innovate. I think that is our key job.”

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