News Corp's MySpace refused to comment on Thursday on a report the previous day that said the online social network will fire a massive number of employees.

The online social network is preparing to lay off as many as 500 of its 1,600 workers, the TechCrunch blog reported on Wednesday, as it cuts costs while trying to stay ahead of growing competition from rival Facebook.

MySpace is part of Fox Interactive Media, which houses some of News Corp's online properties. News Corp last month ousted co-founder and Chief Executive Chris DeWolfe and has shaken up management elsewhere in its digital operations.

Like any company with new leadership, Fox Interactive Media is reviewing every aspect of our operations, performance and structure, a MySpace spokeswoman said in a statement.

It's no secret that we are looking for ways to improve our products, increase the value of our digital assets and enhance the overall financial strength of the company, the statement said.

The TechCrunch report comes after the Los Angeles Times reported on June 6 that Fox Interactive Media canceled a plan to move to a 420,000 square-foot office space in Playa Vista, California.

The company had committed to a 12-year, roughly $350 million lease, the Times reported, adding that it was backing off the move because of its financial difficulties.

MySpace's statement to the Los Angeles Times about the Playa Vista building was the same statement that it sent to Reuters regarding the layoffs.

News Corp's $580 million purchase of MySpace's parent company in 2005 was considered among analysts and media experts as a brilliant move by Murdoch to enhance the media conglomerate's digital portfolio.

Since then, advertising revenue has deteriorated and Facebook and Twitter have surpassed MySpace in buzz and popularity in the technology and media worlds.

A search and advertising deal with Google Inc will expire in July 2010, and it is unclear whether the two sides will renew. MySpace derives $300 million a year from that deal, and most Wall Street analysts believe there is no chance that Google will forge a deal on similar terms.

News Corp shares rose 11 cents, or 1.05 percent, to $10.62 on Nasdaq at mid-afternoon.

(Reporting by Robert MacMillan; Editing by Richard Chang)

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