After a half year of falling advertising revenues, ITV has sold Friends Reunited for a song.
After shelling out a lofty £175m for it in 2005, ITV (LSE: ITV) today announced the sale of the Friends Reunited, the social networking site aimed at getting old school buddies and old workmates together, for just £25m.
The news came after today's half-year results announcement, which saw ITV hit by the biggest decline in television advertising revenues on record, leading to a pre-tax loss of £105m for the six months.
The new owner of Friends Reunited is Brightsolid Limited, a division of DC Thomson, publisher of comics including the Beano. Brightsolid also owns findmypast.com, which runs the official 1901 and 1911 census websites, providing treasure troves for amateur genealogists.
Advertising revenues down
ITV's advertising revenues were down 15% in the period, but are said to be improving, with a decline of 12% forecast for the third quarter, and only 7% for September. Viewing figures held up well, though, with a 28% share of peak viewing, no doubt buoyed by the 20m people who were apparently glued to Britain's Got Talent.
Total revenues were down 12%, to £909m, with the bottom line giving us a loss per share of 1.8p (which is massively better than the 39.6p loss per share at the same stage last year. Perhaps unsurprisingly, there will be no interim dividend.
The big worry for investors will surely be the debt situation. While many other companies are getting their debts down these days, ITV's stuck at £728m. At the same time, its pension fund deficit ballooned from £178m to £538m. ITV is currently paying £30m a year into the fund, and that's not going to help it deal with those debts.
Social Networking
What does the dramatic fall in the valuation of Friends Reunited tell us? It was a great idea at the time, but has been largely overtaken by more generic social network sites of the likes of Facebook and MySpace.
When it launched, Friends Reunited was a bit of a niche market, and it is rarely the first entrants into a new business idea that make it big -- as we have subsequently seen. With estimates of the worth of Facebook being adjusted downwards these days -- originally valued at $15b by Microsoft (at a time when it had $150m in revenues and no profits), and currently suggested to be worth less than £4b -- it is clear that Friends Reunited was massively overvalued at the time of ITV's purchase.
But by selling it in such troubled times, Brightsolid might have been handed a bit of a bargain.
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