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Layoffs to hit Fox Interactive [Updated]

June 5, 2009 |  5:42 pm




Fox Interactive Media, suffering from a steep drop in online advertising,  is preparing to lay off a significant number of employees, according to people familiar with the situation.  The number and timing are in flux, but the cuts are expected to encompass a broad array of workers at the Beverly Hills headquarters.

The layoffs are part of a restructuring of Rupert Murdoch's News Corp.'s digital operations and come only two month after former AOL executive Jonathan Miller was named chief digital officer, with oversight of media giant's online properties. It is not immediately known how many employees will be let go, but a year ago Fox Interactive employed more than 2,000 people.

“Like any company with new leadership, Fox Interactive Media is reviewing every aspect of our operations, performance and structure,” said a Fox spokesman. “ It’s no secret that we are looking for ways to improve our products, increase the value of our digital assets, and enhance the overall financial strength of the company.” 

The interactive division of News Corp. includes the MySpace social network and a collection of other online businesses, including IGN Entertainment, and entertaiment movie and product review site In the most recent quarter, the News Corp. said Fox Interactive's revenue was down 11% from a year ago, reflecting a precipitous 16% drop in advertising. At the same time, costs rose 7% due to expenses associated with developing new features at MySpace.

MySpace's troubles have been widely publicized, culminating in the departure this spring of co-founder and chief executive Chris DeWolfe.

People familiar with the restructuring plans say MySpace will bear some of the burden of the cuts, but other divisions will also be affected.

The once-dominant social network has been surpassed by rival Facebook in terms of number of worldwide users. Another technological upstart, the microblogging application Twitter, generates more buzz among the technorati. The latest online traffic report from measurement firm comScore Media Metrix said Facebook and Twitter each added millions of new users, outpacing growth at Fox Interactive.

One industry analyst said all social networks, including MySpace, are struggling to figure out how to make money from their audiences. Spending on Internet advertising for the first quarter of the year is also down by 5%, compared with a year ago, according to the Interactive Advertising Bureau and PricewaterhouseCoopers LLP.

“The online networking space overall hasn’t turned out to be as lucrative as people originally thought. That’s one of the biggest problems,” said Charlene Li,  founder of the Altimeter Group, a research firm specializing in social networks.

In another sign of cost-cutting, Fox Interactive is also seeking to sublet new offices being built at Playa Vista development south of Marina del Rey. The group had agreed to rent 421,000 square feet of space, so it could consolidate its far-flung digital operations. 

-- Dawn C. Chmielewski