MySpace CoFounder Says Purchase Was A Scam

Jonathan writes "Brad Greenspan says he's the real founder of MySpace, not Tom, and the sale of MySpace to News Corp. was a criminal act. In a nine-chapter report, he describes how this was accomplished by hiding the value of the site from Intermix Media's shareholders." From the article: "How was News Corp able to turn $327 million into $20 billion or more of value within a year? The Myspace/Intermix transaction was so low compared to other internet transactions that it is raising eyebrows by analysts and media everywhere. Everyone seems to be asking how News Corp. got such a good deal. It seems too good to be true! After signing the transaction to buy Myspace & Intermix (but prior to the closing), News Corp. itself even showed how strangely little it had paid for Myspace by immediately paying $3.99 per monthly page view for slow growing comparable IGN. News Corp. paid only .03 cents per monthly page view for the hyper fast growing Myspace. Therefore, we can conclude that the fair value of Myspace was 100x or more what News Corp. paid! "

Comments

News corp got ripped off...

[Monkelectric]

Myspace will ultimately be worth nothing. Myspace is already past the height of its popularity, its just coasting on momentum which will run out eventually.

Re:Sounds like sour grapes

[monkeydo]

The company being sold was a corporation, so most likely, only a majority of the board of directors (and possibly the shareholders) had to agree to the sale. Greenspan was a minority shareholder, and apparantly was opposed to the sale. He can sue on the basis that the sale was improper and deprived him as a minority shareholder of some rights. Since there was apparantly a higher per-share offer made, he can argue that the board breached its duty to the shareholders by not taking the higher offer. The board probably has a lot of leeway, and Greenspan will have a hard row to hoe, but there's certainly a possibility that he's right, especially if the board misled the shareholders.

Pageviews as valuation?

[aiken_d]

That's bizarre. Not all pageviews are equal. IGN's pageviews are people who are researching what games to buy, and are therefore prequalified for IGN's advertisers (and a large percentage *will* spend money in that area in the immedaite future).

MySpace's pageviews are teenagers who have little income, and who are not prequalified for any particular product or service, so advertising return rates (and therefore advertising revenue) will be dramatically lower.

I don't know about the "it was stolen from me" angle, but the pricing comparison to IGN is such incredibly fallacious reasoning that it really reduces the guy's credibility in my eyes.

-b