Struggling social network to halve headcount, while responsibility for UK ad and sponsorship sales will pass to Fox Networks

MySpace today confirmed it is cutting 500 jobs – nearly half its remaining staff – and handing over responsibility for UK advertising and sponsorship sales to sister News Corporation company Fox Networks.

It is understood that there will be significant job losses at the News Corp-owned social networking website's London office, as 47% of all staff globally are cut.

MySpace has about 1,060 staff, with some 100 working for its international business in the UK, Germany and Australia and the rest in the US.

As part of the restructuring in London, responsibility for MySpace ad and sponsorship sales will pass to Fox Networks, the online division of Fox International Channels.

Some MySpace UK commercial staff are expected to transfer to Fox Networks, while others are likely to move to posts with MySpace International.

The MySpace chief executive, Mike Jones, said the "tough but necessary changes" would provide the company "with a clear path to sustained growth and profitability".

Jones said the cuts did not reflect the performance of the "new MySpace", referring to the operation's most recent relaunch in October, but was "purely driven by issues relating to our legacy business".

"We are also committed to rebuilding the company with an entrepreneurial culture and an emphasis on technical innovation. The new organisational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side," he added. "While it's still early days, the new MySpace is trending positively and the good news is we have already seen an uptick in returning and new users."

Jones said that outside the US MySpace would retain "a core, dedicated international team to work with partners in order to ensure users, content partners and advertisers continue to be served".

MySpace was acquired for $580m (£360m) in 2005 by News Corp, which was keen to make it big in the burgeoning social space. But its success proved to be shortlived.

Although News Corp today insisted that the swathe of job cuts "in no way" reflected the performance of its repositioning as a "social entertainment" site, MySpace's parent company has been running out of patience with it for some time.

Swingeing cuts were made to the MySpace workforce in June 2009, with 420 jobs axed in the US – about 30% of the company's American staff – and about a third of the overseas workforce, totalling some 720. At least four of its international offices were closed.

But the ailing site has never shown signs of returning to its previous heights. Chase Carey, News Corp's president, in November admitted that the once-booming social network was "a problem" for the company. Hinting that more cuts were ahead, Carey said its losses were "neither acceptable or sustainable" as they widened to $156m (£97m).

Speculation that MySpace was set for a sale has intensified since the October redesign and when Carey one month later said the site had quarters rather than years to turn around its fortunes. The CNBC business network reported earlier this month that a sale of the social network was on the cards for mid-2011, despite the predicted job cuts.

The rise of Facebook made the once-dominant MySpace look even more stagnant. Facebook overtook MySpace as the leading social network in the US back in May 2009, and last month attracted more than triple the number of global unique visitors, 154 million, according to the latest figures from metrics firm comScore.

• To contact the MediaGuardian news desk email editor@mediatheguardian.com or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000.

• If you are writing a comment for publication, please mark clearly "for publication".