Technology Word

NEW YORK (AP) - AOL said Thursday it will pay $850 million to acquire the online hangout Bebo, giving the struggling Internet company a foothold in an expanding business.
Bebo is one of the largest social networks in Britain, is ranked No. 1 in Ireland and New Zealand and has a global membership of more than 40 million, according to AOL. In the United States, however, it ranks third behind MySpace and Facebook.
Ron Grant, AOL’s president and chief operating officer, said the deal should help AOL expand internationally and Bebo grow in the United States. The all-cash deal, expected to close in a month, also should give AOL an engaged audience from which it can generate additional advertising revenue.
AOL has been looking for ways to boost its advertising revenue to offset steep declines in dial-up Internet subscriptions. After several quarters of strong growth, AOL’s advertising expansion has been slowing, putting pressure on the company’s parent, Time Warner Inc., to sell off the Internet unit.
The deal is an acknowledgment that AOL still needs to seek additional outlets for expanding its audience and its advertising opportunities. But it also underscores the growing value of social networks such as Bebo to media companies as potential gold mines for online advertising dollars.
News Corp. bought MySpace for $580 million in 2005, but has estimated the network is now worth more than $15 billion. News Corp. also owns the Fox television and movie studios in addition to its newspaper and Internet holdings.
Facebook Inc., which owns the Internet’s second-largest social network behind MySpace, now arguably has a $15 billion market value, based on Microsoft’s purchase late last year of a 1.6 percent stake for $240 million.
“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 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 expects 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.
Bebo has about 100 employees operating in offices in the U.K., San Francisco and Austin, Texas.
AOL was advised by Banc of America Securities LLC and Deutsche Bank Securities Inc. Bebo was advised by Allen & Co.

via AOL

NEW YORK (Fortune) — AOL will pay $850 million to acquire global social networking site Bebo.com in an all-cash deal announced Thursday.

With 40 million members, Bebo falls a distant third to Facebook and MySpace (NWS, Fortune 500) in the United States, but it vies for the top spot in terms of audience in the United Kingdom and has a fast-growing global audience.

“Bebo is the perfect complement to AOL’s personal communications network and puts us in a leading position in social media,” said AOL chief executive Randy Falco.

AOL hopes to leverage its advertising sales business across Bebo’s network. Time Warner (TWX, Fortune 500) owns AOL and Fortune.

Bebo will be the cornerstone to AOL’s social media strategy. When integrated with instant messaging services ICQ and AIM, it is expected to reach 80 million members.

Started in 2005 by San Francisco programmers Michael and Xochi Birch, the company has approximately 100 employees.

Bebo’s site looks a lot like MySpace with a cleaner interface. It has been a pioneer in combining professionally produced entertainment and user-generated content with programs like KateModern.

The show’s title character, Kate Modern (whose name is a play on the famous British museum, the Tate Modern), is a waifish art student trying to make it in London. She and her friends record and post short video diaries and chat with viewers. Her popularity is one reason why Bebo’s 40 million members spend an average 33 minutes on the site.

Bebo also has partnership with media companies like CBS (CBS, Fortune 500) and MTV (VIA).

The deal comes just one week after AOL launched Open AIM 2.0, which allows developers greater freedom to develop for the AIM network and integrate AIM into its sites and applications.

Bebo has a number of pre-existing deals with AOL competitors. In September the site announced a partnership with Yahoo (YHOO, Fortune 500) to sell the site’s display ads in Britain and Ireland and to integrate Yahoo! Answers with Bebo’s site. That followed a Microsoft (MSFT, Fortune 500) partnership that let members IM with anyone - Bebo friend or not - on Windows Live Messenger. Shields declined to comment on what will happen to those deals. First Published: March 13, 2008: 9:16 AM EDT

Digg Facebook Bebo’s British invasion
via CNN

NEW YORK - Time Warner Inc’s AOL Internet division said on Thursday it will buy social network Bebo for $850 million in cash, bolstering its consumer Internet offerings even as the media conglomerate mulls splitting off the business.

Bebo, which claims a global membership of about 40 million users, is the top social network in Britain, Ireland and New Zealand, it said. It is No. 3 in the United States behind News Corp’s MySpace and Facebook.

“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.”

The two companies had spent the last six months hashing out the deal, executives said in an interview with Reuters. Grant said Bebo’s heavy focus on media and international interest attracted AOL to Bebo.

The purchase comes amid a wholesale transformation of AOL from a dial-up Internet provider to an online advertising powerhouse.

It has spent nearly $1 billion to create one of the biggest third party display ad units, Platform-A. AOL aims to gird against the prospect of bigger rivals as Microsoft Corp pursues a deal to buy Yahoo Inc and following the closing of Google Inc’s purchase of DoubleClick.

AOL said Bebo will 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.

Despite its global popularity AOL has not had much success turning that into a business.

AOL said its advertising system is well positioned to turn social networks into a thriving business despite difficulties its rivals face. Google, which is the search advertising provider for MySpace, expressed difficulties in “monetizing” MySpace’s traffic.

Bebo President Joanna Shields will continue to run Bebo and will report to Grant after the transaction closes.

Banc of America Securities LLC and Deutsche Bank Securities Inc. advised AOL. Allen & Co advised Bebo.

via MSN