Last Spring, Fox Interactive signed a 12-year, $350 million lease and announced it would move into LA office park Playa Vista in July 2009. That move is no longer happening.
“The realities of the current economy make the prospects of a move incredibly expensive, a fact that I believe makes this decision not only good for our working environments, but also for our bottom line,” News Corp (NWS) digital head Jon Miller told employees in a memo.
Another reason Fox won’t be moving to the new offices? It won’t need the bigger space. PaidContent’s Rafat Ali reports that FIM will soon cut its 2,000-person headcount through layoffs, “likely to be a significant number.” FIM revenues were down 11% y/y in Q109.
In March, Pali Research analyst Rich Greenfield said he expected layoffs would come to Fox Interactive because he doubts Google will renew its $300 million per year advertising deal with the News Corp division when it expires in 2010.
Here is Miller’s memo:
Since coming on board, it’s no secret that I have asked each of the executive teams within FIM to conduct a comprehensive strategic review of their businesses to ensure that we are operating as efficiently and effectively as possible. These reviews have included a very close look at our costs and a full examination of our resource allocation – an important exercise that will help us determine whether our resources are aligned properly with our business priorities. This process is still ongoing and we will be communicating the details of the reviews as the results become available.
One immediate result is that we have determined that we will not be moving to Playa Vista. After taking many different factors into account, we have decided that the best plan for our businesses is to remain in our current locations for the near future. We’re making great progress building strong standalone businesses at each of our LA locations, and the last thing we want to do is to interfere with that momentum. In addition, the realities of the current economy make the prospects of a move incredibly expensive, a fact that I believe makes this decision not only good for our working environments, but also for our bottom line.
As I mentioned above, the strategic reviews are ongoing and I assure you that our executive teams are working as quickly as possible to determine what – if any – additional decisions will be made and we will communicate with all of you as frequently as possible in this regard.
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