Word that the social network site Facebook might be sold to Yahoo for around $1 billion is a reminder of the deal Rupert Murdoch scored when he bought MySpace last year for $650 million. Facebook had 9 million visitors last month, which is a lot, but not nearly the 50 million that MySpace generates. Brad Greenspan, whose company bought what would become MySpace, said he regrets cutting the deal with News Corp. Well, he did more than regret it. He filed suit in L.A. Superior Court, alleging that News Corp. had underpaid. "I was one of the guys out there at the time saying, ĎHey, letís not do the deal,'" he told Red Herring. Could you imagine how much MySpace would go for now? Ouch.
These days, Greenspan is competing with News Corp. on another front: China. He has launched a a company called BroadWebAsia that has invested in and partnered with 20 social networking, Internet search, and entertainment sites in Asia. In the next couple of months, Greenspan hopes to raise $50 million to $100 million to raise more purchases. Meanwhile, Murdoch's wife, Wendi Deng, was in China recently, negotiating a joint venture that would allow MySpace to enter that market. But whether it's Greenspan or Murdoch, China is considered a very tough environment to break in, so we'll see.
Here's more from the Red Herring interview:
Q: What is your personal stake in MySpace at this point?
A: Zero. It got bought by Fox, and so I was forced to sell. I owned about 10 percent at the time of the transaction. I was probably the largest individual stakeholder through my ownership of Intermix, which owned MySpace, and I was one of the guys out there at the time saying, ĎHey, letís not do the deal, itís a bad deal and letís keep MySpace, make it an independent publicly traded company. Better experience for the user and better for the shareholders as well.í But obviously, unfortunately, I wasnít able to win the day. But now I think everyone is looking back at that moment in time and realizing it was a mistake to sell to Fox.
Q: So youíre saying that youíre not happy with the way Fox is handling the company?
A: I think that the growth rate on MySpace was quite clear before the Fox transaction, and it was sort of on a 300 to 350 percent growth rate already. It was clear to me that it was going to continue to be where it is or even larger by now just by looking at the historic growth of it. If anything, in my view, Fox has just hurt the progress. At best, I think Fox has just stood to the side and been a neutral in terms of something that was going to be at this size and popularity and sort of known by that point. It was doubling right in that July, August, September 2005 timeframe. If you look at any of the comScore data or anything like that, itís pretty clear that the growth rate was at that 320- to 350-percent range.