AOL, the Internet arm of Time Warner is set to pay $850 million to acquire social media network Bebo, which has total global membership of more than 40 million. Bebo is one of the largest social networks in UK, and is ranked number one in Ireland and New Zealand and number three in the US, according to AOL.
As social networks such as Bebo have grown in popularity, so has their value to media companies as potential goldmines for online advertising dollars. News Corp., which also owns the Fox television and movie studios in addition to its newspaper and Internet holdings, bought MySpace for $580 million in 2005, but has estimated the network is now worth more than $15 billion, although the price tag placed on Bebo makes this seem a little high.
“Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media,” said Randy Falco, chairman and chief executive of AOL. AOL said current Bebo president Joanna Shields will continue to run the company, reporting to AOL President and Chief Operating Officer Ron Grant.
The acquisition is part of AOL’s shift from a subscription-driven business to becoming a public Web site that generates income from building traffic and selling advertising, similar to rivals Yahoo Inc. and Microsoft Corp.’s MSN. AOL, which has launched 17 international Web sites over the last year and has plans to expand to 30 countries outside the U.S. by the end of 2008, said Bebo plans to launch in five countries this year, and will be “featured prominently” in AOL’s international expansion efforts after the deal is closed.
No financial figures were given for Bebo but social networking has proved difficult monetize so far and most, including Facebook, have seen their phenomenal growth falter in recent audience figures.