MySpace.com founder presents proposal to Dow Jones, urges shareholders to reject News Corp.

By Lisa Kerner

Charlotte, N.C., July 20 - MySpace.com founder and head of Journal Investment Group Brad Greenspan wants Dow Jones & Co. to "break out of its slumber" and become a leader in the "lucrative arena of digital media." To that end, he and his investment company put forth a proposal to Dow Jones in an open letter to the company's shareholders on Friday.

Highlights of Greenspan's proposal included:

• Journal Investment Group would provide a $400 million to $600 million loan to existing Bancroft family members to buy out liquidity-seeking family members at $60 per share;

• Dow Jones would consider undergoing a leveraged recapitalization that includes the repurchase of up to 50% of all outstanding shares at $60 per share; and

• New board members would help create at least four new joint venture groups related to the digital/video assets of Dow Jones.

According to Greenspan, the proposal would provide immediate liquidity for a portion of Dow Jones' holdings at $60 a share while maintaining the company's "independence and integrity."

Greenspan said his strategy "centers around leaving the print publications of Dow Jones intact to continue serving as the gold standard of financial reporting, and creating additional earnings streams through digital media initiatives that can produce a stock price above $100 a share."

Proposal seeks to grow digital assets

Greenspan said he believes that with an estimated 88,600 average viewers per day in 2009, the Dow Jones financial news channel could generate revenue of $456 million. "Assuming an operating margin of 33.3%, this translates into operating profits of approximately $152 million in 2009," Greenspan told shareholders.

The investor also said he believes that Wall Street Journal/Video could generate 10 billion video views for the year, with $243 million in revenue and $135.5 million in operating profits. Greenspan's proposal also encouraged Dow Jones to take on rival Yahoo! Finance by offering WSJ.com content to consumers for free in combination with cross-promotion.

"I can assure you, News Corp. has similar designs on monetizing the Dow Jones digital media assets. Why let Fox Corp.'s shareholders reap the benefits while Dow Jones shareholders' down the road will question why they only received $60 a share?" Greenspan said in his letter.

Greenspan went on to cite his own experience with MySpace.com. By accepting a bid for $580 million, shareholders lost out as the company was valued at more than $20 billion less than two years later.

"I urge the Bancroft family and all shareholders of Dow Jones to give strong consideration to the proposal of the Journal Investment Group and to recognize the enormous growth opportunities available as the dominant financial brand in print, online, and television," Greenspan said.

As previously reported, Dow Jones' board of directors said it would recommend to its shareholders, including the Bancroft family, a merger agreement that reflects the $60-per-share cash proposal offered by News Corp. for all of the outstanding shares of Dow Jones' common stock and class B common stock.

The board has reviewed drafts of a merger agreement, an editorial agreement and a voting agreement, according to a company news release.

Bancroft family spokesperson Michael B. Elefante said the family and the trustees of trusts for their benefit are also evaluating the proposed transaction with News Corp.

Dow Jones is a provider of business news and information services based in New York.

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