News Corp. is taking its first steps toward dissolving its News Digital Media subsidiary in the next few months as it transfers production of broadcast and cable network-related Web sites FoxNews.com, FoxSports.com and Fox.com to their respective broadcast and cable entities.
"Mr. Murdoch has always been skeptical about advertising-based stand-alone Web sites, and these sites haven't even neared profitability," says Andrew Butcher, News Corp. spokesman. "This is a reflection that he isn't going to wait around forever for something he doesn't think is a viable operation."
Butcher adds that the sites will continue to have original content and they'll continue as they are more or less. "They'll just operate more closely with the broadcast and cable entities, and that will result in a lot of savings," he says.
And in a year marked with dotcom failures, savings are too good to pass up. "It makes perfect sense," he notes.
News Corp. hasn't made it clear how and when employees will be moved over and/or laid off, but Butcher says there will be a couple of hundred employees who will be taken in by the broadcast and cable entities. Current staff levels at News Digital Media, including the sites and staff at Stats Inc. (which will continue operations) is about 450.
"Thankfully we haven't been burned that badly by the Internet because Rupert always had a healthy skepticism of its potential profitability and he has a much broader view of what new-media should mean," Butcher explains. "It includes our satellite operations and interactive TV developments, and that's where he sees the big potential, in broadband and wireless."