The latest step in Rupert Murdoch’s effort to turn around the fortunes of his digital businesses came Tuesday in the form of hefty layoffs at MySpace.
MySpace, the social networking site owned by News Corporation, the media conglomerate controlled by Mr. Murdoch, said it was laying off roughly 400 employees, or nearly 30 percent of its staff. After the layoffs, MySpace will have about 1,000 workers.
The company said the layoffs were an attempt to return to a “start-up culture.”
In a statement, Owen Van Natta, a former Facebook executive who became chief executive of MySpace in April, said: “Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company. I understand these changes are painful for many. They are also necessary for the long-term health and culture of MySpace. Our intent is to return to an environment of innovation that is centered on our user and our product.”
MySpace, which was acquired by News Corporation in 2005 for $580 million, was once the pre-eminent social networking site. But more recently it has lost some luster to Facebook, and at the same time has come up short of News Corporation’s financial projections.
Until recently, MySpace still had an advantage over Facebook in the United States, although Facebook had more users globally. But recently, according to comScore, Facebook has matched MySpace in the United States, with about 70 million members.
MySpace’s identity is closely associated with entertainment and music — a place where, for example, an upstart band would go to find a following. But Facebook has become the gathering place for users who want to share photos and connect with long-lost friends.
“Right now, MySpace has been attempting to compete to be the biggest social networking site,” said Josh Bernoff, an analyst at Forrester Research. “I don’t think that’s been successful. If MySpace is about your entertainment life, Facebook is about your whole life.”
Financially, MySpace is said to be profitable but has fallen short of expectations at a time when some of News Corporation’s other business, like newspapers and local television, have been a drain on the company’s earnings.
Last year, Fox Interactive Media, the unit that includes MySpace, fell about 10 percent short of a $1 billion revenue projection. In the latest quarter the company did not break out revenue for the unit, but did say that revenue at an operating division, of which Fox Interactive Media is a large component, decreased by $254 million, or 35 percent.
In the previous quarter, the unit had declines in both revenue and operating income.
In addition, News Corporation also cut jobs at the unit. “We are examining the operating structure of Fox Interactive Media and its role as a corporate umbrella for a number of our digital businesses,” said Dan Berger, a spokesman for the unit. “In conjunction with the MySpace staff cuts this week, we reduced our corporate F.I.M. staff and also assigned certain positions to specific business units,” he added, referring to Fox Interactive Media.
To revamp MySpace, Mr. Murdoch has lately engineered a series of management changes.
In April, News Corporation appointed Jon Miller, the former chief executive of America Online, as the chief digital officer of the company, overseeing MySpace and the company’s other Internet businesses — Photobucket, IGN Entertainment and the company’s interest in Hulu, the online video partnership with NBC Universal.
Mr. Miller wasted little time in making changes.
Just weeks later he pushed out Chris DeWolfe, one of the founders and then the chief executive of MySpace. Tom Anderson, another founder of the social networking site, has stayed on.
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