Brad Greenspan, a former shareholder of the company that owned MySpace has presented details of his bid to buy a large piece of Dow Jones (DJ), setting himself up as an alternative to Rupert Murdoch’s News Corp.
Greenspan’s fund would provide a $400-600 million loan to existing Bancroft family members so that those who want out at $60 a share could take their money. Then, sufficient debt would be taken on to enable the repurchase of 50% of all outstanding shares at $60.00 per share. Another $500 million would be borrowed to fund new TV and web-based initiatives. These new businesses would be successful enough to drive Dow Jones shares to over $100.
Mr. Greenspan’s program, outlined in a letter published in The Wall Street Journal, has two flaws. The first is based on the risk involved in creating a successful business new channel, an online financial video business, and a potential competitor to Yahoo! (YHOO) Finance. The second is that there is no one in Dow Jones senior management with the background to handle this kind of transformation of the company. The is no knock on the current senior officers. It is simply a fact based on their CVs.
Under his proposal, Greenspan would get two seats on the company’s board. That is not enough to dictate who will run the company. That means that current management is likely to remain.The skills needed to drive Greenspan’s vision would continue to be wanting.
In other words. the program would not work.
Douglas A. McIntyre
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