Is Time Warner Having Second Thoughts About Bebo?

16 thoughts on “Is Time Warner Having Second Thoughts About Bebo?”

  1. Thats not surprising. I dont believe even Microsoft’s valuation of facebook is going to hold up. The go go days of free credit are over. It will be startups in the real sense … that will survive. Remember Google’s early days … two men in a garage. We’ll see a lot more of that. Here’s something that helps me keep my job. http://www.8hours.com

  2. Om,
    I know you are a baseball fan and I view these acquisitions like ballplayers. AOL to me is like a middle market team (I am thinking, Toronto) over paying for a ball player. Bebo is like the 100 million dollar contract to Vernon Wells. (maybe it’s more like the Angels with Gary Matthews Jr. BLECH)

    I think everyone who knew anything knew immediately that the Bebo purchase was bad. Again its like baseball, you don’t pay for the middle pool of players, ONLY pay for the top. TW could have waited oops.

  3. OM:

    One more from AOL that comes to mind – Truveo (video search) – jogging my memory here – but I think it was $1 Billion plus performance payouts.

    Suggestion – Here is a topic to take apart in a new series of commentaries – how about you compile all of the AOL acquistions – and call out the facts (please keep the NYT and WSJ references out of it). It has been done before – but in pieces – and forgotten. So a refresher with facts might be a good digest, and of course entertaining (the real value!). Many more dogs in that pound to pick on – Yahoo, etc.

    Here is a suggestion for the Series Title (taking a hint here from the honest Mr. Bewkes) – “New Media Paradox – Value Destruction by Acquisition”.

    Damn Blogs are getting pathetic these days – I even unplugged my feed reader in my outlook. A GigaOM Genre twist might be the lime in the cocktail! But thats no gurantee I wont bring out the funny stick and beat up your commentaries every so often 🙂

    What says the Malik (Boss)?

    Happy Holidays –

  4. Ok, so why would most agree they paid too much for Bebo?

    The best analysis of social network acquisition prices was this excellent work by Michael Arrington
    http://www.techcrunch.com/2008/06/23/modeling-the-real-market-value-of-social-networks/

    Sure, revenues are expected to take a hit in many markets, but look at the numbers.

    Based upon the Bebo valuation, and advertising reach in key territories, Facebook would be worth $2,461M

    That is a lower figure than I have typically seen quoted in recent months, such as when looking at the real value of the Twitter purchase offering.

    Thus this puts Bebo right on the money, or even a little cheap at the price.

    I am sure there are still people who would be very happy to buy a piece of facebook at a $2,461M valuation.

    Thus the biggest problem for Time Warner is not how much they paid, but what Mike highlighted at the end of the article – “execution” or even to be in a position to execute effectively.

    Also don’t forget that Bebo has a totally different footprint compared to other social networks – heavily UK and Ireland.That is a different ad market with different decline and recovery possibilities. A blessing and a curse, but a fair method of hedging bets in a global marketplace that is suffering.

  5. @G: re: “Truveo — I think it was $1 Billion plus performance payouts”… srsly? please cite your refs on that one. all articles i’ve seen don’t disclose a #, except this one that says it was “biggest since $435M Advertising.com deal”:
    http://tinyurl.com/9g88nx

    i wouldn’t be surprised that it was over $100M, but unless the earnouts were massive i can’t see it being anywhere close to $1B. (on the other hand, if i’m wrong then i’m hitting Tim up for sushi next time i play disc with him 😉

    clearly Bebo got a great number out of AOL, but it is almost laughable that TWX is the one saying so… that has got to be the absolute definition of Kettle, Black.

  6. @dave mcclure – “jogging my memory” as I put it in my comment above re. the price – will look into the real filings and post back here (before you hit up Tim for Sushi :-).

  7. @chris…well said. Social networking is a features set, not an industry. Why don’t any bloggers focus on this. Why does Facebook make no money, because it offers no service or innovation, just social networking features 🙂

  8. @alex: “Why does Facebook make no money…”

    ahem.

    word is Facebook made over $100M in 2007, and are estimated to make >$270M in 2008. also for reference, MySpace made over $550M in their most recent fiscal year ended June 2008.

    if either of those figures qualifies as “no money” in your book, remind me to borrow money from you next time i head to Vegas.

This site uses Akismet to reduce spam. Learn how your comment data is processed.