Google Deal Makes Fox Less of a Local Player?

Now that the dust has settled, it is time to begin assessing the local impact of Fox Interactive's alliance with Google. The three-year, nine-month deal gives Google a place on MySpace's upcoming toolbar, and the right to place ads on every page of almost every Fox site, including MySpace, IGN, Scout.com, RottenTomatoes.com and assorted Fox TV and news properties (but not Sports, which stays with MSN). In return, Fox gets a guarantee of $900 million — if it meets certain traffic levels.

The question for me is whether Google's money means the end of Fox's nascent efforts to build up its local properties. Lately, there has been increased chatter, including from Murdoch himself, about heating up the local TV station Web sites. There are also nascent local efforts at MySpace, which has an underdeveloped classified section that someday might be positioned for local sales beyond used guitar amps and iPods. And then there is Scout.com, which caters to the national interest in local college and high school sports teams but could be developed for local users as well.

I think my tentative answer is "no," Google doesn't kill Fox's local efforts. But don't expect to see Fox develop local sales channels either; especially where Google can do the job more efficiently. Also, don't expect to see Fox buy its own search engine, such as a PremierGuide or Local.com.

Fox could have used its TV stations and Web sites to sell local ads on such an engine and drive traffic. But with the Google deal, that just won't happen. Instead, Fox will be pumping on all cylinders to meet its traffic obligations to Google.

According to HitWise, Google gets 10.8 percent of its traffic directly from MySpace. In some ways, then, the deal is defensive because it seeks to keep MySpace's young users using Google, rather than wandering to other engines. That’s a strategic issue. But other than that, it really seems like a healthy marriage, where both sides can expect to grow without inhibiting one another's ambitions.