ITV Buys 'Friends' Website for £175m

07 December 2005

As predicted [WAMN: 08-Nov-05] ITV, the UK's largest commercial broadcaster, has bought hot website Friends Reunited for up to £175 million ($304.5m; €258.4m) via a mix of cash, shares and loan notes.

The website boasts 12m paying subscribers and was launched as a back-bedroom venture five years ago. It enables users to trace and stay in touch with former school-friends.

The sale leaves its founding trio some £60m richer between them, while management and staff will share £48m. The venture's initial investors will be rewarded with £12m.

ITV's move into the online sector emulates that of New Corporation-controlled satellite rival BSkyB, which during the summer heeded its master's voice and embarked on a buying spree that included online operator [WAMN: 19-Jul-05].

The Financial Times implies that the broadcaster's move online will displease the moneymen, averring that "Charles Allen, chief executive of ITV, has work to do explaining the £120m deal to buy Friends Reunited to some of his institutional investors and analysts".

However, analysts appear to be relaxed about the acquisition. "While the long term benefits are far from clear, Friends Reunited has a relatively strong brand in the UK, is EBITDA positive, and at this price will not stretch ITV's financial metrics outside their current rating category," opines Alex Griffiths, a director of rating agency Fitch.

Data sourced from Financial Times Online; additional content by WARC staff