Blog Post

AOL Buys Bebo, Time Warner Still Schizophrenic

beboaol.jpgAOL, the online division of Time Warner, is buying fast-growing social network Bebo for close to $850 million in cash, the company announced today. AOL is talking some gobbledygook about marrying AIM, ICQ with a real social network. Whatever!

Randy Falco, chairman and CEO of AOL, said that it gives the company a social media play, and will allow them to “leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers.” Given the challenges MySpace and Facebook have had monetizing their audiences, it’s a ballsy move by AOL.

I like Bebo and feel that they have done a good job of balancing the commerce and community. They were always a good acquisition candidate and there were several reports about them being in talks, most recently a report on TechCrunch that talked about a $1 billion buyout. However, given Time Warner’s history of messing up everything it buys, I wonder how long before Bebo becomes Beb-oh!

It is even more brave considering how “Platform A” has its own management problems. Today there are reports of AOL slashing half-their sales force. I am on their conference call and basically getting a whole lot of what is corporate non-speak.

* Falco is talking about engagement and how clever they are in buying Bebo for $850 million and compares it to the investment made by Microsoft in Facebook.
* User engagement is the new mantra. It is making my ears bleed.
* Bebo President Joanna Shields dodges the question about their advertising partnerships with Yahoo and Microsoft.
* Bebo founders Michael & Xochi Birch are leaving the company, or so it seems from Shields’ comments.
* Bebo is launching in Spain, Holland, France and Germany over the next few months.

The deal also shows the schizophrenic nature of my former employer, Time Warner. Jeff Bewkes wants to get rid of AOL (and Time Warner Cable) and focus entirely on his old, Hollywood-style businesses. Earlier this week he was happy to talk about a deal with Yahoo and get rid of AOL, which is going to through a major crisis, as reported by several other outlets. And at the same time they are spending $850 million in cash on Bebo. Maybe it helps AOL become a more sexy acquisition, or a spin off candidate?

Related Posts:

* Bebo launches Platform, Aligns with Facebook.
* Bebo, Open Media & Its Broadband Advantage.
* Apple-Bebo: E-Commerce comes to SocialNets.

Photo: Randy Falco, Chairman and CEO of AOL, Joanna Shields, President of Bebo, and Ron Grant, President and COO of AOL. ( Via Business Wire)

28 Responses to “AOL Buys Bebo, Time Warner Still Schizophrenic”

  1. ol' yeller

    Please note below the average 10-12 year shorter life expectancy for Schizophrenics. It’s a serious disease, like coronary artery disease or any of the various forms of cancer, yet people continue to use the word in an almost joking fashion. I don’t see headlines anymore [ever?] saying “AOL Eats Bebo, Waddles Like Lazy Fat Slob,” or “AOL Still Retarded, Buys Bebo” or that “AOL Buys Bebo in Epileptic Fit…” Sorry for the soapbox speech, but just thought I’d point this out.

    Wikipedia, Schizophrenia:

    Schizophrenia, from the Greek roots schizein (σχίζειν, “to split”) and phrÄ“n, phren- (φρήν, φρεν-, “mind”), is a psychiatric diagnosis that describes a mental illness characterized by impairments in the perception or expression of reality, most commonly manifesting as auditory hallucinations, paranoid or bizarre delusions or disorganized speech and thinking in the context of significant social or occupational dysfunction. Onset of symptoms typically occurs in young adulthood,[1] with approximately 0.4–0.6%[2][3] of the population affected. Diagnosis is based on the patient’s self-reported experiences and observed behavior. No laboratory test for schizophrenia exists.[4]

    The disorder is primarily thought to affect cognition, but it also usually contributes to chronic problems with behavior and emotion. People diagnosed with schizophrenia are likely to be diagnosed with comorbid conditions, including clinical depression and anxiety disorders; the lifetime prevalence of substance abuse is typically around 40%. Social problems, such as long-term unemployment, poverty and homelessness, are common and life expectancy is decreased; the average life expectancy of people with the disorder is 10 to 12 years less than those without, owing to increased physical health problems and a high suicide rate.[6]

  2. All I can say is that I wish that I was the creator of Bebo! That is a nice hunk of money. Enough to support an entire country! Social networks are really grasping a large audience. Hope it is a smart move by AOL.