Friends Reunited & the benefit of hindsight

friendsReunited-hiresNo, its not a new take on the Harry Potter franchise.

Today’s newswires are reverberating with the news that Friends Reunited acquired by ITV for £170m in Dec 2005 was today sold for £25m.

From the outside, it doesn’t look like they did a great deal to commercialise the site, using it solely as a programme sponsor to try and drive traffic. Facebook, MySpace and Twitter then came along, entered the public consciousness and altered the digital social landscape irreversibly.

As a very occasional user, I was never prepared to pay to join, rarely visited the site and seldom used it to look for people from old schools or workplaces. It just never offered enough.

Which highlights ITVs greatest problem; they have a single revenue stream that is declining, and can’t quite decide where to take the business next. The BBC enjoys public funding, manages one of the world’s best and most used websites, operates an impressive on demand service (iPlayer) and has additional revenue streams from lucrative global, book and DVD sales. Sky maximises sales of a diverse product portfolio from an increasingly loyal customer base. ITVs commercial future is less assured. Production companies like Simon Cowell’s Syco take the lion share of revenue from leading shows, the on demand service is stalling, and attempts at quality programming hit the wall.

A salutory lesson in trying to buy success indeed.

We read every day in TechCrunch about the next big tech firm being valued for millions. If you’re considering a purchase, taking the time to align new purchases with overall business objectives, having a clear customer offering, and getting the cultural fit right should take some of the risk away.

That’s if you want happy shareholders, happy customers and if you don’t want to be a major case study for business students for the next twenty years.

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