News Corp’s MySpace social-networking unit fired almost 30 per cent of its staff to save money in response to falling advertising sales and gains by larger rival Facebook Inc. The cuts lower US staffing at Los Angeles-based MySpace to 1,000, according to a statement. The announcement suggests the company eliminated about 400 jobs. Dani Dudeck, a MySpace spokeswoman, declined to comment on the firings, severance costs or how much money may be saved.

News Corp Chairman and Chief Executive Rupert Murdoch is retooling his Internet operation to regain momentum. The $580 million purchase of MySpace in October 2005 looked shrewd the next year when Google Inc signed a $900 million accord to sell ads on the site. Facing the expiration of that deal and gains by Facebook, Murdoch, 78, hired former AOL chief Jonathan Miller in April to overhaul the digital operation.

“Two years ago MySpace seemed like it had unlimited upside, and people were throwing around valuations in the multibillions of dollars,” said Doug Creutz, an analyst with Cowen & Co in San Francisco. “The site has lost a lot of that cachet.” Miller, 52, head of Fox Interactive, has already replaced MySpace’s management, bringing in former Facebook executive Owen Van Natta, 39, to replace MySpace founder Chris DeWolfe as CEO in April.