Feeds

Investors were cheated by Murdoch buyout, MySpace founder says

$580m sale price 'eye-popping theft'

Top 5 reasons to deploy VMware with Tegile

Brad Greenspan, founder of social networking giant MySpace, has claimed that the sale of the business to Rupert Murdoch's News Corporation last year for $580m was a scandal and has demanded an investigation into his allegations that it was sold too cheaply.

"[This is] one of the largest merger and acquisition scandals in US history," he said. He wants the deal to be investigated by the US financial regulator the Security and Exchange Commission, the Department of Justice and the Senate Committee on Finance.

Greenspan alleges that the management of the company, and chief executive Richard Rosenblatt in particular, hid vital financial information about MySpace parent Intermix Media's performance in order to convince the shareholders that $580m was a fair price for the business.

"News Corp's valuation has increased by $12bn since the transaction occurred just one year ago, and there are several independent analysts today that agree that MySpace is worth tens of billions of dollars," Greenspan said. "It is time everyone knew the truth about the 'hijacking' of MySpace and the individuals responsible for this eye-popping theft."

Greenspan says that executives believed at the time that the company could be worth $20bn but did not disclose this to shareholders.

Last February, Greenspan filed a complaint against Intermix and VantagePoint Venture Partners in the Superior Court of California County of Los Angeles. In that complaint he claims that News Corporation bought Intermix as a result of an unfair process and at an unfair price that did not reflect the value of the business. Another shareholder lawsuit has recently been filed in Federal Court in relation to the deal, said Greenspan's statement.

"It's unfortunate that Mr Greenspan continues to issue press releases complaining about a deal that many industry experts initially believed was a risk for News Corp to take," a News Corporation spokeswoman told Reuters news agency. "We've strategically built this business since the acquisition and are just now beginning to realise real financial value. This is simply a case of sour grapes making for loud complaints."

Greenspan said that he found internal company reports which said that MySpace revenue grew at a rate of 1,289 per cent a year between 2003 and 2005. The growth of the whole of the company, which included other units, was 52 per cent, which is the figure which most shareholders were given, says Greenspan.

Greenspan made $47m from the sale of the company, which he left in 2003 amid an informal SEC inquiry and restatements of accounts, according to Reuters.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Secure remote control for conventional and virtual desktops

More from The Register

next story
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Yes, yes, Steve Jobs. Look what I'VE done for you lately – Tim Cook
New iPhone biz baron points to Apple's (his) greatest successes
Lords take revenge on REVENGE PORN publishers
Jilted Johns and Jennies with busy fingers face two years inside
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.