Fox Interactive, in the process of its restructuring as the new management settles in (News Corp (NYSE: NWS). digital head Jon Miller, the new MySpace team of Owen Van Natta, Mike Jones and Jason Hirschhorn, etc.), has decided against moving into the new office building in Playa Vista in the Los Angeles area, according to an e-mail sent out by Miller on Friday (pasted below). This means one of the biggest LA commercial real estate deals in recent years has been scuttled as well. The company announced its plans to move into a swanky new half-million square feet of office space in Playa Vista last year, when the world looked a lot different; it is committed to a 12-year, approximately $350-million lease, according to LAT. The idea with the new space was to consolidate all of FIM's LA offices. The move was planned to start this month, but now the company is looking to sublet the space, a formidable task at best in this economy.
As part of this rethink, FIM will also be laying off some employees, though not clear how many would be affected. The layoffs are likely to be a significant number, considering how the unit has missed its revenue targets over the last year; in its Q109 results, revenues were down 11 percent. FIM currently has about 2,000 employees. These layoffs come about two months after News Corp brought in former *AOL* CEO Jon Miller to head News Corp.'s digital efforts; FIM reports into Miller.
This follows a similar rethink by News Corp about moving into new office space in London: News International, the news arm of News Corp in UK, decided against a headquarters' investment last November.
The memo from Miller, pasted below:
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.
By Rafat Ali