News Corp's MySpace is laying off nearly half its staff, setting the stage for a sale of the former Internet social networking leader as is it refocuses as an entertainment site.
The restructuring affects about 500 employees, or 47 percent of the company, and comes after weeks of speculation on technology blogs about the cuts.
People close to News Corp have said privately that the media giant is not involved in sales talks. However, shrinking MySpace's losses will be key in attempts to shop it to would-be buyers like private equity firms or even Yahoo Inc, according to some reports.
News Corp is exploring all options for MySpace, including a sale, News Corp Chief Operating Officer Chase Carey told Reuters in November. He also told investors that month that MySpace had quarters rather than years to turn itself around.
The restructuring will affect all divisions and regions, Chief Executive Mike Jones said in a statement on Tuesday.
These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product, Jones said.
Once the top Internet social networking site, MySpace has been eclipsed in recent years by Facebook. MySpace still gets around 60 million visitors a month, but is way behind the 150 million monthly visitors to Facebook, according to comScore data.
Facebook was recently valued at $50 billion after getting cash from Goldman Sachs and Russian investment firm Digital Sky Technologies.
In October, MySpace launched a new version of the website centered on music, movies and entertainment for the 35-year-old-and-under crowd, dubbed Generation Y.
MySpace said on Tuesday it will make strategic local partnerships in Britain, Germany and Australia to manage advertising sales and content. In Britain, MySpace will work with Fox Networks, while details about partnerships in Australia and Germany are being finalized.
There have also been reports that MySpace China, a separately owned and managed company, is laying off most of its workers. Reuters has learned that the Chinese business is also being shopped to private equity firms.
News Corp bought MySpace in 2005 for $580 million after News Corp Chief Executive Rupert Murdoch famously swooped in to beat rivals like Viacom Inc in the bidding.
Initially, the deal paid for itself after Google Inc inked a three-year $900 million search advertising deal in 2006. Since then, the website became increasingly irrelevant as a social network for many users as they moved to Facebook.
(Reporting by Alexei Oreskovic in San Francisco, Yinka Adegoke in New York and Melanie Lee in Shanghai. Editing by Andre Grenon and Robert MacMillan)