House of Blues Cuts Jobs at Its Web, Record Units

House of Blues Entertainment Inc. fired 39 employees Thursday in a restructuring of its Internet and record label divisions as it tries to escape a cash crunch.

The move comes two years after the Los Angeles-based entertainment company predicted it would reap a huge profit from broadcasting pay-per-view concerts online. After spending an estimated $20 million on the strategy in the last two years and watching the tech market collapse, senior executives said they had no choice but to turn back.

In an interview Thursday, House of Blues Chief Executive Greg Trojan said he still believed there is a market for concert Webcasts, “but it would be idiotic to think that that is going to be a profitable business for us any time soon.”

Instead of diverting millions of dollars in profit to continue funding the online operation, Trojan said he will focus on expanding the company’s concert division, which owns or operates 20 amphitheaters, and its eight-venue club chain.

The company yanked a planned $100-million stock offering last year, and has been unable to obtain additional financing to pay for the expansion. Nightclubs planned in San Diego and San Jose have yet to get off the ground.

As part of the restructuring, the company let go about 25 of the 30 employees involved in the filming and editing of concert footage and other material for release on the Internet and other outlets.

House of Blues had ramped up the Internet division amid the dot-com boom two years ago, projecting that the worldwide demand for pay-per-view concerts online would soon exceed $250 million a year. In 1999, the company sent employees to film more than 600 concerts for online viewing. Next year, the company expects to film no more than a dozen.

The company’s Web site will focus on directing visitors to concerts at House of Blues-owned clubs and amphitheaters closest to them, executives said. The shift comes as the number of concert fans buying tickets online is rising rapidly.

House of Blues officials said the company’s concert and club divisions are performing well, generating an estimated $350 million in revenue in the fiscal year ended June 30.