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Founder: News Corp. Hijacked MySpace
Brad Greenspan, who says he, not Chris DeWolfe or Tom Anderson, founded MySpace.com, is accusing News Corp. and MySpace's parent company, Intermix, of defrauding shareholders out of $20 billion. Greenspan filed suit with other shareholders in federal court, asking that MySpace be released from News Corp. control.
Among Greenspan's claims are: that shareholders were deceived as to the true value of MySpace when it was sold to News Corp. for $580 million in July of 2005; that News Corp. rewarded certain shareholders for that deception with cash and indemnity against past misdeeds; and that News Corp. conspired to block competing bids from companies like Viacom.
Greenspan has set up a website called FreeMySpace.com to release his information about the scandal and is calling for federal regulatory authorities to investigate. Calling it "one of the largest merger and acquisition scandals in US history," Greenspan is pleading with the Securities and Exchange Commission, the US Dept. of Justice, and the US Senate Committee on Finance to address the matter.
"The answer to how News Corp. was fortunate enough to buy one of the largest and most valuable Internet companies for pennies on the dollar is now clear," said Greenspan. "I expect as the authorities get their arms around what happened, that this transaction will be unwound and Myspace will be independent."
Greenspan's report names Intermix CEO Richard Rosenblatt as the chief conspirator in the deal, along with Fox Interactive Media president Ross Levinsohn.
"In addition to Rosenblatt's stunning and incriminating emails, the two highest non-director senior executives, chief financial officer Lisa Terrill and chief operating officer Sherm Atkinson, have come forward through their legal counsel indicating significant breaches of fiduciary duty by Rosenblatt and the directors as part of the News Corp. transaction," said Greenspan.
He also says that Rosenblatt withheld from shareholders that MySpace revenue was growing at 1200 percent clip. Rosenblatt, he claims, misled Intermix's board into thinking that MySpace was unable to turn its traffic in revenues. News Corp.'s valuation has increased by $12 billion in just one year after the acquisition.
"A public company that refuses to tell shareholders the revenue of its most valuable asset flies in the face of what it means to be a public company" said Greenspan. ""It is time everyone knew the truth about the ‘hijacking' of Myspace and the individuals responsible for this eye popping theft."
Greenspan's accusations that the MySpace founders are not what they seem match a journalism student's claims in a report he prepared on the roots of wildly popular website. Last Spring, Trent Lapinski sold his article to a publication about Intermix and the site, but the publication decided against publishing, says Lapinski, after News Corp. threatened lawsuits if the story was printed. Lapinski finally sold his article to Valleywag.com, who published it earlier this month.
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Jason L. Miller is a staff writer for WebProNews covering technology and business.
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Jason Lee Miller
