News Corp.'s Internet Operation Cuts Staff - TheStreet

News Digital Media

, the online media unit of

News Corp.

(NWS) - Get Report

, has dismissed around 20% of its New York news staff members and has told all New York sports staff members to move to Los Angeles or lose their jobs.

The employees were informed late Thursday and Friday, a day or two after Rupert Murdoch, News Corp's. chairman, told investors at the Australia-based company's annual meeting that he was not confident in advertising revenue-based Internet business models.

News Digital Media has for months tried to move some New York sports operations to its Los Angeles headquarters. Separately, 13 or 14 of the 70 New York-based news editorial staff members were fired. In operation since 1997, News Digital Media employs 375, according to its corporate Web site. A spokeswoman, Melissa Schumer, said the unit actually now employs 475.

The sports division, which runs the

FoxSports.com

Web site, is being consolidated in Los Angeles because the company will open a new 3,000-square-foot production facility there next week, Schumer said. Danny Greenberg, the unit's senior vice president for sports, moved to Los Angeles in January, Schumer said. The company first offered its sports staff members jobs in California around that time, according to a News Digital Media employee who spoke on the condition of anonymity.

A few more than 20 sports staff members work in New York, she said. The company has offered to pay their moving expenses. Schumer said she is unsure how many employees will lose their jobs because some employees are still considering whether to move. She said the potential layoffs do not represent a cutback because the employees who decline to move will be replaced in Los Angeles.

The employee who spoke on the condition of anonymity had already decided not to move. Those who declined were dismissed around 5 p.m. Thursday, this person said.

The 13 or 14 employees of the

FoxNews.com

Web site who were dismissed Friday were not offered a chance to be moved to Los Angeles, Schumer said.

At both sites, the company is "adjusting our operations to reflect our synergies," Schumer said. For FoxSports.com that means moving to the new facility, and for FoxNews.com it means focussing on breaking news, she said.

On Thursday, Murdoch told the News Corp. annual shareholders meeting in Adelaide, Australia, that he was a "bear on all that pure dot-com business," according to a report in the

Sydney Morning Herald

. "I think unless you are planning a dot-com

with large transaction revenues, which is the B2B -- and we even have doubts about that --you are simply relying on putting information and having it paid for by the advertising community."

According to that newspaper, Murdoch was asked if this view meant that News Corp would wind down

News Interactive

, an Australian unit whose operations mirror the U.S. business of News Digital Media. He said: "We have learnt a lot about News Interactive and we have slowed down a number of our plans, not here where it is extremely well run, but in a number of other countries."

Working closely with the affiliated

Fox

broadcast entities will help the U.S. sports and news operations avoid some dot-com pitfalls, including depending solely on online advertising revenues, Schumer said.

"It makes sense to have each digital side close to its broadcast sister," Schumer said.

Earlier this month, Roger Ailes, Fox News' chairman and chief executive, signed a new three-year contract that extends his employment through January 2004 and adds the newly created title of executive editor of FoxNews.com.

News Corp. closed Friday down 63 cents, or 1%, at $42.06.