Friends Reunited founders net £30m in sale to ITV

Published on Wednesday 7 December 2005 02:17

THE husband and wife team who set up the Friends Reunited website have netted £30 million after selling the company to ITV.

The broadcaster is paying a total of 120 million for the business which now runs five websites, including the increasingly popular Genes Reunited. The final value of the deal could climb higher, with up to 55 million payable in four years' time if the websites hit performance targets.

It also emerged yesterday that ITV is considering a branded Friends Reunited show to make the most of the hundreds of human interest stories resulting from reunions between friends, families and old flames.

Yesterday's widely-anticipated sale of Friends Reunited means that software engineer Steve Pankhurst, aged 41, and his 38-year-old wife, Julie, both now leave the company they originally set up from a room in their semi-detached house in North London.

Mrs Pankhurst, a mother of two, hit on the idea for Friends Reunited while pregnant in 2000 as she wondered if there was a way of discovering how many of her old school friends might also be pregnant.

Joined by a business partner, Jason Porter, the site exploded in popularity and was receiving five million hits a day a year after launch.

Friends Reunited diversified into new websites aimed at connecting like-minded people following the arrival in February 2003 of a new management team headed up by Michael Murphy, former chief operating officer of the Financial Times.

It went on to launch Genes Reunited, a family history site, which now has 3.3 million members and contains 46 million names. Earlier this year, it paid 3.3 million for the online rights to the 1901 Family Archives census.

Its other websites include a Friends Reunited dating service and Friends Reunited Jobs, a new brand set-up following its purchase of the online employment site TopDogjobs.com in March this year.

Steve Pankhurst said: "When we started Friends Reunited in our spare bedroom in July 2000 we had no idea that what began as a hobby would gain phenomenon status, let alone develop into a family of successful websites.

"However, as the business is now run by Michael and the management team we brought in three years ago and the business is all grown up, it's time for my wife Julie and I to let go knowing it's in safe hands."

The ITV deal will also mean major pay-outs for 52 Friends Reunited managers and employees, who share a 40 per cent stake, as well as the couple's business partner Jason Porter.

By acquiring Friends Reunited, ITV now becomes the eighth most popular web destination in the UK, beaten only by established giants like Google, Ebay, and BBC Online. ITV's own website, www.itv.com, is the gateway to the broadcaster's popular shows.

ITV is keen to identify new ways of making money aside from traditional television advertising, and the Friends Reunited deal provides it with a valuable database of users.

Jeff Henry, director of ITV's Consumer Team said: "I am confident that Friends Reunited's unique sites and comprehensive subscription base, combined with ITV's services and vast range of content will prove both compelling and profitable."

ITV is already conducting its own online trials with a broadband service that allows users to buy and sell under the brand name "ITV Local".

The commercial broadcaster is also looking at ways of using the human interest stories created by encounters on Friends Reunited for television output. "It is something we are considering," a spokesman said.

Paul Richards, a media analyst at Numis Securities, said: "ITV1 is seeing its audience erode and has launched channels like ITV2 and ITV3 amid increasing competition. It needs to find new ways of making money from its content."