• Reuters, Friday, October 6, 2006 11:30 AM

Brad Greenspan, founder of MySpace parent Intermix media, is seeking a federal investigation into the sale of his company to News Corp. last year, claiming that News Corp. defrauded shareholders by undervaluing the Web's most popular social-networking site. Greenspan claims that former Intermix CEO Richard Rosenblatt hid revenue growth data at MySpace from shareholders to distort the company's financial picture, so he could execute a deal quickly. In his claim, Greenspan says MySpace could now be worth more than $20 billion. He is suing Intermix--now a News Corp. company--as well as venture-capital firm VantagePoint "for breach of fiduciary duty."

"[Rosenblatt] knew it was worth billions of dollars--he was able to pass it off to News Corp. to get a sweetheart deal for himself." In his report, Greenspan says that at the time of the sale, shareholders believed MySpace's revenue growth to be 52 percent; in fact, it had grown 1,289 percent on an annualized basis from December 2003 to June 2005. News Corp. later purchased Intermix for $580 million. Greenspan's report can be found at www.freemyspace.com. In response to his claims, a News Corp. spokeswoman said: "We've strategically built this business since the acquisition and are just now beginning to realize real financial value. This is simply a case of sour grapes making for loud complaints."

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