Is Friends Reunited in freefall?

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An article in The Sunday times suggests that the value of Friends Reunited might be even lower than initial estimates as ITV looks to dispose of the one-time Internet darling.

“Analysts” are said to value Friends Reunited at between £20-40m according to the article.  However the private equity guys (never knowingly overpaying) seem to think the business is worth a little less. 

A brief reminder - ITV paid £175m for the business about four years ago - not the smartest strategic move you might conclude (with the benefit of hindsight). Economists have a phrase for paying over the odds - the winners’ curse - a phrase that seems apt for ITV as far as Friends Reunited is concerned!

As in all disposals, the true price is what someone is actually prepared to pay for the business, and much depends on whether ITV’s merchant bankers can create a competitive auction for the business.  I doubt there are many desperate to get their hands on a business that has seemingly declined so rapidly.

Looking at the Alexa web-stats service, you can see how the Friends Reunited site has suffered a steady decline in usage over the last couple of years, despite what I remember was a promotional relaunch in mid 2008.  The FR website still just about makes it into the top 10,000 websites globally (that is about the top 0.01%).  But only just ahead of a site like ours, and we don’t have the 19 million members that FR claim for their business.  I wonder just how many of those FR-registered users have long since abandoned the site and now make full use of Facebook.

 

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