News Corp scales online plans

The much-publicized News Corp/MCI online venture, called iGuide, apparently has hit the skids, the New York Times reported today. As many as half of its 515 employees are expected to be dissmissed and News Corp will try its luck at being an Internet-only service, according to the Times.

The news comes in the wake of MCI's decision last week to pull out of the joint venture and reduce its 50-percent stake in the service. "The truth is that MCI never firmly committed to iGuide. They were only interested in helping and developing it," said Peter Krasilovsky, principal analyst at Arlen Communications. "All this comes out of the very surprising Microsoft deal announced with MCI last week," he added.

Employees and analysts say the venture has gone through too many changes and has never had a solid strategy. "They never got their act together, it's that simple," said Rick Spence, an analyst at Dataquest. "You would think that with a powerful content and network provider you would have all the pieces, but a lot of times things don't go as planned," he added.

The report also states that a source close to the company said that Scott Kurnit, News Corp's CEO, will resign soon, but some disagree. "People forget that Kurnit is the head of the content division of MCI, and this was something that was forced upon him," said Krasilovsky. "Scott may want to do something on his own, but he doesn't have to leave, and I think that's the bottom line."

According to the Times, Kurnit had no comment except to say that he will "oversee the transition" of the venture as it seeks new investors.