MySpace founder aims to thwart Murdoch's WSJ bid

Brad Greenspan, the 34-year-old former chief executive of the MySpace social networking site, has emerged with a rival proposal for the future of The Wall Street Journal - pitching him into a second bitter conflict with the septuagenarian media mogul Rupert Murdoch.

Mr Murdoch's proposed $5bn (£2.5bn) takeover of the Journal's parent company, Dow Jones, appeared to move a step closer yesterday after the collapse of talks between Pearson, owner of The Financial Times, and General Electric, which owns the financial news channel CNBC, which had been aimed at making a joint bid to rival that from Mr Murdoch's News Corp.

But Mr Greenspan has emerged with an alternative plan to invest $1.5bn (£750m) for a 25 per cent stake in Dow Jones and to offer advice aimed at improving the profitability of its internet properties, including WSJ.com and the financial news site MarketWatch.

His interest in Dow Jones comes two years after he tried unsuccessfully to stop News Corp from buying MySpace. His rival bid for the company was rejected because of uncertainty that he had the financing available to do the deal, and a subsequent legal challenge, which alleged the $580m (£290m) price tag criminally undervalued the business, was thrown out of court. Since then, he has pursued a variety of online and legal campaigns to protest at News Corp's running of MySpace, claiming that Mr Murdoch is crimping free speech on the site.

"I do not believe any current publicly disclosed acquisition offers for Dow Jones fully recognise the potential which Dow Jones' unique assets, properties, and brands represent," he wrote in a letter to the board.

Mr Greenspan said he has assembled a consortium of investors willing to put up $1.5bn (£750m) to buy a non-controlling stake in the company in return for two seats on the board. He is yet to reveal to the board the names of any other investors in the proposed consortium and has not so far had a response.

He netted about $47m (£23m) for his stake in MySpace when the company was sold in 2005, two years after he was ousted as chief executive.

In a business plan sent to Dow Jones, Mr Greenspan said some $250m of the money would be set aside for investment in the online businesses, which by adding video content could become a major rival to CNBC, he suggests.

The Bancroft family, which has controlled Dow Jones for more than a century, remains split over whether to pursue a sale of the company and has been unable to agree on its next move in negotiations. Mr Greenspan's proposal was pitched to appeal to them as a means of safeguarding the company's independence.

Some members are understood to be particularly disappointed at the failure of Pearson and GE to structure a joint bid which would have bundled the FT and its stable of business magazines into a new private company with CNBC, The Wall Street Journal and Dow Jones' other financial information businesses. Many Pearson shareholders had expressed their opposition to the company investing more money in the newspaper business, and the debacle again raisesFT's future within the conglomerate.

Pearson said last night it would continue to talk to GE about ways that the FT Group and CNBC could work together.

Meanwhile, the News Corp executives working on the Dow Jones bid are expecting talks to speed up sharply from this point. The Dow Jones board took over responsibility for the negotiations from the Bancroft family earlier this week, in part to avoid investor lawsuits that might have alleged the company was damaging value by dragging its feet.

The board is expected to send News Corp a proposal as early as today that would set out demands for an independent board to safeguard the Journal's editorial independence - a key condition set by the Bancrofts before they will consider a sale to Mr Murdoch.