News Corp.'s MySpace unit was preparing to announce a dramatic downsizing of its business as part of efforts to lure a potential buyer for the social networking site, MarketWatch reported Tuesday.

The Wall Street Journal cited Monday people familiar with the matter, saying the site could lay off between a third and a half of its roughly 1,100 employees. Another unidentified source said termination notices could be distributed as early as mid-January ahead of talks for a possible sale, according to CNBC.

Additional reductions in headcount would likely be necessary to attract a buyer, with News Corp. expected to complete a sale by mid-year, the CNBC report added.

Potential buyers of the site were said to include social-gaming company Zynga and private equity firm Silverlake Partners, though there could be hundreds of potential buyers interested in a slimmed down MySpace.

The restructuring is the latest step in MySpace's intensifying turnaround effort. The social network reduced its staff by nearly 30 percent last summer, laying off hundreds of employees.

News Corp., which acquired MySpace in 2005 for $580 million, also owns MarketWatch, the WSJ, FOX Business Network and NewsCore.

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