ITV sells Friends Reunited for £25 million

Valerie | 06 Aug 2009, 09:20

ITV has sold Friends Reunited for £25m, considerably less than the price it paid for the social networking site fours year ago, the Times reports, ending a long running saga about its future.

Under the terms of the deal, ITV will sell Friends Reunited to Brightsolid, a genealogy group owned by DC Thomson, the publisher of the Beano, after buying it for £170 million in December 2005.

Friends Reunited has suffered in recent years as rival social networking sites like Facebook, Bebo and MySpace emerged on the scene, forcing the firm to abandon their subscription model and rely on advertising revenue instead. According to the FT, Friends Reunited still has more than 20 million members, although traffic had fallen to 1.7m unique visitors a month last year.

Genes Reunited is seen as the most lucrative part of the Friends Reunited business and the bulk of the value.  Ancestry.com, a US rival, on Monday filed for a $75m public offering. Ancestry generated revenues of $107m in the last six months, with almost 1m paying subscribers. According to DC Thomson, the deal will create the biggest genealogy business in the UK.

The sale comes as ITV considers new revenue generation models to combat its worst year-on-year decline on record during the six months to June 30, which saw a dramatic slump in advertising revenues of 15% or £108 million. Chief Executive Michael Grade who is due to leave the company at the end of 2009 has described trading conditions as the toughest he had seen in 30 years.

Analysts have suggested that ITV should consider changing to a subscription model to boost revenues as new research commissioned by UBS revealed 40 per cent of terrestrial households in the UK would switch to pay-TV if it moved away from free-to-air. As c&binet as previously reported, the broadcaster has indicated that it would consider charging to view on-demand content.

As the hunt continues for a new ITV chief executive, one thing that is clear is that they will be bracing themselves for an ‘in-tray of challenges’ as the broadcaster considers its future in a radically altered operating environment.