MySpace Founder Fails To Get More Money
last updated: 12 October 2006
A judge has dismissed MySpace founder Brad Greenspan's claims that the social networking site was undervalued when it was sold to Rupert Murdoch's News Corp.
The case rested on the fact that Greenspan alleged that the company officers for Intermix, MySpace's parent company, were greedy and acted in their own best interests rather than those of the company's shareholders when agreeing to the $580m deal.
Superior Court judge Carolyn Kuhl dismissed Greenspan's claims. She said that the acquisition was legal and the decisions taken legitimately.
"News Corporation and Fox Interactive Media feel vindicated by Judge Kuhl's ruling," said Mike Angus, Fox Interactive Media's general counsel in a statement.
Just last week Greenspan released a statement requesting an investigation by the SEC, US Department of Justice and the US Senate Committee on Finance.
"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 in that statement.
It's unclear exactly where Greenspan's tens of millions of dollars valuation comes from. Recently RBC Capital Markets analyst Jordan Rohan suggested that MySpace could be worth $15bn in three years but even that seems a wild shot in the dark. He based that on MySpace's "trajectory for profitability", which is similar to Google's. It's also based on the $900m search deal MySpace recently made with Google but it doesn't seem logical to base one company's profit projection on anothers but on whom it also depends on for those profits. Google's value is also 55 times it's operating profit, even if that is accepted as being reasonable, MySpace would need to generate $270m in profits to reach a $15bn valuation.
Greenspan has stated he is to appeal the decision.
Superior Court judge Carolyn Kuhl dismissed Greenspan's claims. She said that the acquisition was legal and the decisions taken legitimately.
"News Corporation and Fox Interactive Media feel vindicated by Judge Kuhl's ruling," said Mike Angus, Fox Interactive Media's general counsel in a statement.
Just last week Greenspan released a statement requesting an investigation by the SEC, US Department of Justice and the US Senate Committee on Finance.
"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 in that statement.
It's unclear exactly where Greenspan's tens of millions of dollars valuation comes from. Recently RBC Capital Markets analyst Jordan Rohan suggested that MySpace could be worth $15bn in three years but even that seems a wild shot in the dark. He based that on MySpace's "trajectory for profitability", which is similar to Google's. It's also based on the $900m search deal MySpace recently made with Google but it doesn't seem logical to base one company's profit projection on anothers but on whom it also depends on for those profits. Google's value is also 55 times it's operating profit, even if that is accepted as being reasonable, MySpace would need to generate $270m in profits to reach a $15bn valuation.
Greenspan has stated he is to appeal the decision.