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We’ve become highly suspicious toward stories in the weekend British papers – some papers more than others. But the latest – reported all at the same time by Telegraph.co.uk, Guardian.co.uk, FT.com and Mail Online – says ITV (LSE: ITV) is considering putting Friends Reunited up for sale as part of a hastily arranged new cost-cutting measure. There’s no source to the story, and ITV wouldn’t comment when asked by paidContent:UK.
Despite announcing 1,000 job cuts in September, latest reports say ITV is poring over a new cost review produced by Boston Consulting Group, likely to lead to a further 500 cuts. The plan is reckoned ready to be unveiled at ITV’s March 4 full-year earnings and, though it hasn’t yet been decided, a Friends Reunited sale is “firmly on the agenda”, one source tells Telegraph.co.uk. A report last month said ITV now values Friends Reunited at less than it paid for it.
Off-loading would cap off just over three years, since ITV bought the site for an eyebrow-raising £120 million, in which the broadcaster has totally squandered the legacy from what was a UK zeitgeist and an early precursor of the social networking phenomenon. Since the December 2005 acquisition, Friends Reunited has withered on the vine – holding on to its core audience of subscription payers, rather than innovating to take on the likes of Facebook, cost Friends nearly half its user traffic between 2007 and 2008.
In fact, Friends Reunited had been the star performer in what has been a lucklustre ITV web portfolio, making up two thirds of online sales (£22 million in 2007). That was before ITV decided to kill its cash cow by axing the subs, making Friends ad-supported last April – just in time for the advertising recession. Now Friends is pulling in less money than before. ITV Consumer MD Jeff Henry paid the price for that – and ITV’s failure to meet the crazy target of £150 million online sales per year – when web operations were merged with TV ops in November. Now, the three Friends founders have left after reaping the final tranche of a £55 million earn-out and, despite a relaunch last year, the site may be on the block, the reports say. One big problem – who on earth would buy it?