| ITV buys out Friends Reunited for 120 million pounds |
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LONDON: Britain's largest TV broadcaster ITV Plc. said it has bought personal portal Friends Reunited for an initial price of 120 million pounds. The website, founded by husband-wife team of Steve and Julie Pankhurst in 2000 at their apartment, has a core platform devoted to uniting long lost friends and acquaintances and a set of allied services like genealogy and dating.
ITV will pay the price in a mix of cash and newly issued notes and shares. It hopes the acquisition will help it to broaden its current portfolio of mostly advertisements and broadcasting.
ITV's chief executive officer Charles Allen said the acquisition does not constitute a panic buying for the company as several media companies are trying to consolidate on the online space. Friends Reunited was being eyed by Trinity Mirror and Daily Mail & General Trust.
ITV said it will pay an additional 55 million pounds for the site in 2009 depending on its performance. Friends Reunited is expected to have a revenue of 12.4 million pounds and earnings before interest, tax, depreciation and amortisation of 6.6 million pounds in 2005.
ITV aims to have at least half its revenues from outside its flagship ITV1 channel by 2012, including a sizeable contribution from mobile phones, online and other consumer media. Currently, about 30 percent of revenues come from outside ITV1, which has struggled with falling viewership as audiences move to multichannel television.
ITV considers the investment in Friends Reunited as a key strategic decision in order to have difference revenue streams in the years to come. The ITV1 terrestrial channel is in long-term decline, with the growing popularity of digital television hampering advertising revenue growth. Recently, the company had launched mobile phone and broadband TV services and started a pilot on its ITV Local project -- which is meant to tap the online classified advertisements market.
Friends Reunited has some 15 million registered members. Adding them to ITV.com website users' list, will make the company the eighth largest online operator in the U.K. in terms of unique users.
The basic idea of Friends Reunited was that of Julie, who was pregnant in 2000 and wondered if there was some way of finding out who all of her long-lost friends would also be pregnant. Steve and Julie along with the other co-founder Jason Porter then worked on the website from the Pankhursts' spare bedroom.
The Pankhursts and Porter have exited the day-to-day operations of Friends Reunited after it had appointed Michael Murphy as chief executive in 2003. The founders own about 60 per cent in the company and Murphy and his management team roughly 30 per cent.
Steve, 41, said Tuesday night after the deal was finalised that he had no idea what they could do with the money. "We are going to sound like those sad people who win the lottery and say it won't change them one bit.
"But we like our lifestyle and we will take our time and not go mad. We would never in a million years have imagined that it would grow into something this big."
Friends Reunited has some 52 staff, who all will get windfalls, so will Murphy. Murphy will continue to run the company under the ITV management.
Posted
on : Wed, 07 Dec 2005 16:15 GMT | Business News
By : Rob Davis
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