-By Brian Morrissey

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CANNES, FRANCE News Corp. CEO Rupert Murdoch isn't shy about speaking his mind on almost any subject. That includes Facebook, the chief rival of News Corp.'s MySpace, the leading social networking site.

While acknowledging Facebook's tremendous growth in the past year, Murdoch yesterday dismissed the online service as little more than "a directory." He said the attention lavished on Facebook is not in line with the challenges it has faced in building its audience into a sustainable business.

"They've not monetized as well as us," he said. "They've done a great job of being the flavor of the month the last six months of last year."

Peter Chernin, president and COO of News Corp. and Murdoch's second in command, was slightly more charitable, acknowledging that Facebook had come on strong as a credible competitor to MySpace in the social networking space, particularly when it opened up its site to outside developers.

MySpace recently followed suit, offering developers the chance to build tools for MySpace users. This week it overhauled its home page with new advertising options. More innovations are to come, Chernin promised.

"It really galvanized us," he said of Facebook's rise. "It's what competition should do. We owe a great debt to Facebook for knocking us in the head."

Murdoch and Chernin spoke here yesterday at the Cannes Lions International Advertising Festival. The executives addressed a range of other issues, from politics to the economy to the enduring popularity of reality TV.

Noting the rise of Barack Obama, who Murdoch has previously praised, the media mogul said the presumptive Democratic presidential nominee's ability to draw huge crowds is a "very, very interesting phenomenon." Obama's personal popularity could lead him to make tough decisions, Murdoch said, such as reforming educational policies by pushing reforms that have been rejected by powerful advocacy groups.

However, Murdoch said he hasn't heard much from either Obama or Republican John McCain on the economy that has impressed him.

"Both candidates at the moment are talking nonsense in economics," he said.

Murdoch said he's a "realist" and recognizes the inflationary pressures the world economy is facing. But he still sees no reason for retrenchment at News Corp.

"We're going to plow straight ahead," he said.