What Does the Bebo Buyout Say About AOL and Time Warner?

March 14, 2008 05:03 PM
by findingDulcinea Staff
Yesterday, AOL announced that it would buy the social networking site Bebo for $850 million, changing the way many view Time Warner's struggling child.

30-Second Summary

The buyout is the largest acquisition AOL has made for some time, and the most important of Jeff Bewkes’ new tenure as Time Warner’s chief executive.

Bebo is a social networking site in the mold of MySpace and Facebook. Bebo has the third largest U.S. network after the other two, is very popular in England and ranks number one in Ireland and New Zealand.

The acquisition surprised many analysts, who thought that Time Warner was looking to unload the floundering AOL.

Condé Nast Portfolio writes, “Time Warner has consistently blamed AOL for pulling down the company's financial performance, has halted investment in AOL, and recently collapsed the company's Netscape division.”

The move is either Time Warner’s attempt to revive AOL, or bulk it up to attract bidders who have been previously uninterested in the company.

AOL sees Bebo as a way to move from an “an Internet-access subscription business into an advertising-focused one,” reports The Wall Street Journal. AOL will use its Platform A online ad network to monetize Bebo’s international user base.

Dan Grabham of TechRadar writes that the buyout could be beneficial for AOL, asserting that “Bebo appears poised for greater growth.”

However, Kara Swisher of All Things Digital worries that Bebo is too small a presence in the “critical U.S. market,” and the social networking site boasts only “negligible profits.”

Headline Links: AOL buys Bebo

The acquisition
The implications for AOL and Time Warner

Opinion & Analysis: Was buying Bebo a good move for Time Warner?

Good Deal
Bad Deal

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