OMEN
03-14-2008, 02:43 PM
Time Warner's AOL internet division is to buy social network Bebo for $US850 million ($NZ1.05 billion) in cash, bolstering its consumer Web offerings even as the media conglomerate mulls splitting off the business.
Bebo claims a global membership of about 40 million users and the deal promises to significantly expand AOL's growing business of selling online adverts on the internet outside of the United States.
The site is one of the top social networks in Britain and the market leader in Ireland and New Zealand but it is yet to create the same buzz in the United States, where it ranks third behind News Corp's MySpace and Facebook.
It is generally aimed at a younger audience than the college-favourite Facebook and it boasts that its users spend an average of 40 minutes on the site each day contacting friends, sharing photos and discovering new music.
"AOL, at its core, is a way for people to connect," AOL President Ron Grant said in a phone interview. "We need to get back to our roots."
Grant said Bebo's heavy focus on media and international interest had made it particularly attractive as it already has a service in Poland and is set to launch in France, Germany, Italy, Spain and the Netherlands in the next five or six months.
The purchase comes amid a wholesale transformation of AOL from a dial-up Internet provider to an online ad powerhouse.
It has spent nearly $US1 billion to create one of the biggest third-party display ad units, Platform-A, as it aims to gird against the prospect of bigger rivals. Microsoft is currently pursuing a deal to buy Yahoo and Google has just purchased DoubleClick.
NETWORKING
"Bebo will be the cornerstone of our strategy to transform online experiences for advertisers, media companies and consumers," AOL Chairman and CEO Randy Falco said.
AOL said Bebo would also help round out its personal communications offerings, now comprised of AOL Instant Messenger and ICQ, two wildly popular services that let users send quick text, video and audio correspondence.
But despite its global popularity AOL has not had much success turning that into a business.
"The acquisition demonstrates again how important the social networking sites are to major media and Internet brands, who are looking for new means to advertising growth," said Paolo Pescatore, an analyst with UK-based CCS Insight.
"They represent a powerful opportunity, with their access to demographic data and ability to target specific audiences."
Bebo President Joanna Shields will continue to run the group and will report to Grant after the transaction closes. Falco said he expected the deal to close in "the normal time" – within around 30 days.
The site was founded by husband and wife Michael and Xochi Birch, who own an undisclosed stake. Shields refused to say whether they would stay on with the site on a long-term basis.
Bebo is a product of the curious migratory patterns of online social networks.
Like many of the world's top social networks, Bebo is based in San Francisco. And like many of these companies, its operations have taken root in distant lands.
Bebo first grew in Britain. Rivals such as hi5 are powerful in Latin America. Google's Orkut first became popular in Brazil, then India and LiveJournal dominates in Russia.
Social network pioneer Friendster now finds the bulk of its users in Southeast Asia, meanwhile the two major US players, MySpace and Facebook, have focused on expanding over the past year into international markets.
MySpace has local operations in 20 countries and has translated the site into languages ranging from Spanish to German to Japanese. Roughly 60 per cent of Facebook's 67 million active users now live outside the United States.
Another group which is set to benefit from the deal is the venture capital firm Balderton Capital which will receive around $US140 million, more than nine times the original sum invested.
Banc of America Securities LLC and Deutsche Bank Securities advised AOL. Allen & Co advised Bebo.
Reuters
Bebo claims a global membership of about 40 million users and the deal promises to significantly expand AOL's growing business of selling online adverts on the internet outside of the United States.
The site is one of the top social networks in Britain and the market leader in Ireland and New Zealand but it is yet to create the same buzz in the United States, where it ranks third behind News Corp's MySpace and Facebook.
It is generally aimed at a younger audience than the college-favourite Facebook and it boasts that its users spend an average of 40 minutes on the site each day contacting friends, sharing photos and discovering new music.
"AOL, at its core, is a way for people to connect," AOL President Ron Grant said in a phone interview. "We need to get back to our roots."
Grant said Bebo's heavy focus on media and international interest had made it particularly attractive as it already has a service in Poland and is set to launch in France, Germany, Italy, Spain and the Netherlands in the next five or six months.
The purchase comes amid a wholesale transformation of AOL from a dial-up Internet provider to an online ad powerhouse.
It has spent nearly $US1 billion to create one of the biggest third-party display ad units, Platform-A, as it aims to gird against the prospect of bigger rivals. Microsoft is currently pursuing a deal to buy Yahoo and Google has just purchased DoubleClick.
NETWORKING
"Bebo will be the cornerstone of our strategy to transform online experiences for advertisers, media companies and consumers," AOL Chairman and CEO Randy Falco said.
AOL said Bebo would also help round out its personal communications offerings, now comprised of AOL Instant Messenger and ICQ, two wildly popular services that let users send quick text, video and audio correspondence.
But despite its global popularity AOL has not had much success turning that into a business.
"The acquisition demonstrates again how important the social networking sites are to major media and Internet brands, who are looking for new means to advertising growth," said Paolo Pescatore, an analyst with UK-based CCS Insight.
"They represent a powerful opportunity, with their access to demographic data and ability to target specific audiences."
Bebo President Joanna Shields will continue to run the group and will report to Grant after the transaction closes. Falco said he expected the deal to close in "the normal time" – within around 30 days.
The site was founded by husband and wife Michael and Xochi Birch, who own an undisclosed stake. Shields refused to say whether they would stay on with the site on a long-term basis.
Bebo is a product of the curious migratory patterns of online social networks.
Like many of the world's top social networks, Bebo is based in San Francisco. And like many of these companies, its operations have taken root in distant lands.
Bebo first grew in Britain. Rivals such as hi5 are powerful in Latin America. Google's Orkut first became popular in Brazil, then India and LiveJournal dominates in Russia.
Social network pioneer Friendster now finds the bulk of its users in Southeast Asia, meanwhile the two major US players, MySpace and Facebook, have focused on expanding over the past year into international markets.
MySpace has local operations in 20 countries and has translated the site into languages ranging from Spanish to German to Japanese. Roughly 60 per cent of Facebook's 67 million active users now live outside the United States.
Another group which is set to benefit from the deal is the venture capital firm Balderton Capital which will receive around $US140 million, more than nine times the original sum invested.
Banc of America Securities LLC and Deutsche Bank Securities advised AOL. Allen & Co advised Bebo.
Reuters