MySpace braced for major job cuts

As well as MySpace and Fox Interactive Media the cuts are likely to hit other News Corporation digital properties such as PhotoBucket, Rotten Tomatoes and IGN.

A Fox Interactive Media spokeswoman did not confirm the rumours but "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."

A MySpace UK spokesman said the company would not comment on rumours or speculation.

Industry blog TechCrunch reported that a number of sources had confirmed that "massive" cuts were coming to MySpace and Fox Interactive Media. It said the number could be as high as 500 and were expected to be announced shortly.

MySpace has recently undergone a significant managerial shakeup, as co-founders Chris DeWolfe and Tom Anderson left and were replaced by former Facebook executive Owen Van Natta as CEO.

On Monday, News Corp's digital head Jon Miller said the jobs cuts were coming after it was decided against moving Fox Interactive Media into a new 500,000 sq ft office space in Los Angeles because of financial restraints.

Fox Interactive Media is currently committed to a 12-year $350m lease with the new office. It intends to lease the space to another party instead.

Fox Interactive Media has nearly 3,000 staff, of which about half are from MySpace. The company also owns the likes of GameSpy, AskMen, Fox Audience Network and Fox Digital Publishing Group.

The company missed its revenue targets over the last year as online advertising dollars stunted by the recession, with first quarter numbers down 11%.

MySpace has also been struggling with a decline in web traffic and internet buzz, as users flock to websites like Facebook and Twitter in droves.

The layoffs are seen as a way for MySpace to trim the fat for when its search and advertising agreement with Google comes to an end in July 2010.

It's unclear if the two sides will renew the contract, of which MySpace derives $300m a year from the deal.

Analysts agree that if another agreement is drawn up, it will be for far less than its predecessor, meaning another huge hit in revenues for MySpace.

Last month MySpace announced it had cut around 45 jobs and FIM cut 100 jobs in January.