I didn’t quite believe it when one of my most trusted sources told me that AOL was seriously considering selling Bebo. But I have now confirmed the rumour with three other sources intimately acquainted with the company. AOL is indeed quietly pondering a sale after watching Bebo perform much worse than it had hoped. That, combined with an advertising market buffeted by the waves of the economic downturn, means Bebo’s days at AOL could be numbered. Selling Bebo only a year after AOL acquired it for $850 million would be an astounding about-face. How did this happen?
[UPDATES: As a result of this story, more sources are coming forward. One I trust says Bebo is being pitched at $200 million. Update 2: Sources inside AOL are denying that it is exploring a sale. Bebo also denies a sale. Update 3: We have been in contact with corp communications at AOL, they say on the record: "There is no truth to this rumor." Four of our sources, including former and current Bebo insiders and a well-placed VC, say otherwise. Last December Gigam published "Is Time Warner Having Second Thoughts About Bebo?". I'm not saying Bebo is formally on the block, but I am saying that a sale is something under consideration].
My sources paint a picture of a startup which cleverly went about wooing advertising agencies, their clients, and – in the end – a media company that was prepared to jump on the social networking bandwagon during late 2007. There is absolutely no suggestion that anyone was dishonest or misrepresented the situation. But a year on it’s clear that AOL itself projected more growth onto Bebo that the network could deliver.