MySpace cuts staff by 47% to pare losses

MySpace is cutting 47 per cent of its staff amid reports that owner News Corp is preparing the social-networking website for a possible sale.

MySpace is firing about 500 employees in a broad restructuring across all of its operations, according to an e-mailed statement from the Beverly Hills, California-based website today. MySpace will enter into local partnerships in the UK, Germany and Australia to manage advertising and content.

Chief Executive Officer Mike Jones, charged with paring losses and rejuvenating business at MySpace, has retooled the site to focus on helping users discover music and videos, rather than connect with each other. Last month the site renewed an advertising pact with Google Inc, adding display advertising, after revenue fell short of News Corp projections.

“Today’s tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability,” Jones said in the statement. “These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product.”

After the restructuring, MySpace will be put up for sale, All Things D, a website owned by New York-based News Corp, reported yesterday. The business will be offered to private equity firms and possibly to Yahoo! Inc, the website said.

Stabilising traffic
Rosabel Tao, a spokeswoman for MySpace, said in an e-mail that Jones declined to comment beyond the release. Dana Lengkeek, a spokeswoman for Sunnyvale, California-based Yahoo, said the company doesn’t comment on rumour or speculation.

News Corp, controlled by Chairman and CEO Rupert Murdoch, fell 21 cents, or 1.4 per cent, to $14.41 at 4 pm New York time in Nasdaq Stock Market trading. The Class A shares climbed 6.4 per cent last year, less than the 13 per cent increase in the Standard & Poor’s 500 Index.

MySpace has seen an uptick in new and returning users since the redesign, Jones said in the statement. More than 3.3 million new profiles have been created, and mobile users rose 4 per cent between November and December to more than 22 million, he said.

News Corp will most likely shutter MySpace by June “unless we see a remarkable turnaround in the next few months,” Alan Gould, an analyst said.