Broadcaster ITV has sold social networking site Friends Reunited for £25 million, despite having bought the company for £175 million only four years ago.
ITV acquired Friends Reunited in 2005, yet some commentators said at the time that there was no real business case for the acquisition. Friends Reunited was sold this morning to Brightsolid Limited, a division of publishers DC Thomson.
Michael Grade, the chairman of ITV, told the Times: "This management team did not buy it, let's be very clear about that."
The sale was completed just two hours before ITV posted its half yearly results, where the company revealed it was hit by the worst decline in UK television advertising on record.
The broadcaster made a pre-tax loss of £105 million in the period, but achieved savings of £57 million across the business. ITV is in the middle of a technology-led cost-cutting programme, which aims to deliver savings of £155 million this year and £285 million a year by 2011. The firm said it was on course to deliver the projected savings this year.
The costs savings are mitigating “the impact of market weakness” as a result of the credit crunch and resulting cuts in advertising, said the company.
Richard Cross, CIO at ITV, is at the heart of the cost cutting programme at ITV, he explained to CIO UK that using off the shelf software and hardware and increased outsourcing is delivering results. Since becoming CIO, Cross has outsourced application, desktop and network support as well as transmission of its shows.
"The key thing was to find growth through more efficiency: as IT, we are part of both, we drive efficiencies through IT and drive revenue through technology such as the web and mobile,” Cross said.
“On the efficiency side, we have already done a lot to get more production done on PCs rather than in edit suites. An example of innovation is the way we are using artificial intelligence to predict audiences and to place the right advertisements in front of them.
"There is a lot of pressure on media companies to take risks and move ahead with things that they have been thinking of, but have not got to," Cross says of the wealth of content types and platforms available online today. "Turnaround is focused around content and content -exploitation, and we are still one of the -biggest content providers in Europe."
Another saving grace for ITV is its online revenues, up by six percent in the period to £18 million. The ITV.com site saw revenues increase 100 percent to £10m and its online video service that allows consumer to watch missed and archived content saw video views rise to 116 million. Unique users of the ITV online sites increased to an average of 8.7 million per month, up from six million for the same period last year.