Posted By: Janine Delacroix
By Kenneth LiThu Oct 5, 4:54 PM ET
NEW YORK (Reuters) - The founder of MySpace.com parent
Intermix Media on Thursday said he is seeking a federal
investigation of the sale of Intermix to News Corp. last year,
claiming the deal defrauded shareholders by undervaluing the
Internet's most popular networking site.
Brad Greenspan, Intermix founder, has been an outspoken
opponent of the deal and in February sued the News Corp. unit
and venture capital firm VantagePoint Venture Partners for
breach of fiduciary duty.
On Thursday, Greenspan accused former Intermix Chief
Executive Richard Rosenblatt of hiding revenue growth data at
MySpace from shareholders to present a distorted financial
picture and execute a deal quickly. Greenspan's claim contends
MySpace could now be worth more than $20 billion.
"He knew it was worth billions of dollars, he was able to
pass it off to News Corp to get a sweetheart deal for himself,"
Greenspan said in a telephone interview. "The shareholders paid
a massive price here."
His report can be found at http://www.freemyspace.com
Citing internal company reports he has now uncovered,
Greenspan said MySpace revenue grew 1289 percent on an
annualized basis from December 2003 through June 2005.
Most shareholders were only privy to information on growth
in other units, which, including MySpace, logged a revenue
growth rate of a much lower 52 percent over the same period.
Reuters was not able to independently verify the new
revenue figures.
News Corp., which disputed Greenspan's account, purchased
Intermix last year for $580 million.
Rosenblatt was not immediately reachable for comment.
The media company controlled by Rupert Murdoch has since
ridden a wave of investor and analyst approval for capturing
MySpace, now one of the Web's fastest growing properties. In
late September, RBC Capital analyst Jordan Rohan said MySpace
could be worth about $15 billion within three years.
Greenspan bid against News Corp. to buy the rest of
Intermix he did not own last year, but lost after Intermix's
board voted against his deal.
"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 spokeswoman for News Corp.'s Fox Interactive Media said.
"We've strategically built this business since the
acquisition and are just now beginning to realize real
financial value," the spokeswoman said. "This is simply a case
of sour grapes making for loud complaints."
Greenspan left Intermix in 2003 amid an informal U.S.Securities and Exchange Commission inquiry and accounting
restatements.
He retained an approximate 11 percent share of the company,
which last year settled a lawsuit filed by New York Attorney
General Eliot Spitzer charging the company with illegally
downloading intrusive adware and spyware software into millions
of computers.
Greenspan was ordered to pay $750,000 in fines under the
settlement with Spitzer.
Reuters
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