In Preparation For Sale To Rubicon Project, Fox Audience Network Fires Half Its Staff

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News Corp is on the verge of unloading another one of its digital businesses under Fox Interactive Media, the Fox Audience Network (FAN), to Los Angeles-based ad-optimization startup The Rubicon Project. The deal has not been signed yet and may still fall apart, but the two companies are in the final stages of negotiation, according to sources with direct knowledge of the deal. (Talks have been heating up over the past month). In preparation for the sale, or continuation as a standalone business, about half of its 300 employees were let go yesterday, most of them sales people. Rubicon is more interested in the ad technology.

If the proposed deal with Rubicon goes through, it will get certain assets including FAN’s ad server technology, its self-serve banner advertising platform called MyAds, and about 100 employees to help run those parts of the business. In return, News Corp will get about 20 percent of Rubicon’s shares. (When Fox Interactive Media disposed of Rotten Tomatoes, it structured a similar asset-for-equity swap with Flixster). The fact that the ad server technology is one of the key assets here is particularly noteworthy, given that Rubicon’s public posturing in the past was that the ad server is dead.

FAN also runs one of the largest ad networks on the Internet. However, about half of the ad impressions on the ad network are generated by MySpace. Whether or not that will be part of the deal is one of the last items to be determined. Either way, MySpace is unlikely to continue to run it as a third-party network.

The writing’s been on the wall for FAN for a long time. News Corp started to shop it around last March. A small round of layoffs hit in June, and then Adam Bain, the president of FAN, left to become top revenue officer of Twitter. News Corp was planning to fold FAN into MySpace when interest picked up from suitors including Rubicon.

Rubicon is an advertising technology company that launched in 2007. helps advertisers figure out which ad networks and sites to run their display ads on based on clicks, views, and other metrics. It’s ultimate goal is to build an alternative to Google-owned DoubelClick’s DART, and some of the technology built by FAN can help it get there. That is why it doesn’t need all the sales people. A few may move over to deal with remnant and other lower-quality ads, but Rubicon is primarily a technology play. The company has raised a total of $42 million in venture capital.

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