Social networking sites have drained over $1.5 billion (€1.2 billion) from the wallets of big media investors, with the latest loser being AOL over its loss making investment in Bebo.
AOL, which acquired Bebo just two years ago for $850 million, last week sold out of the site for a price that is rumored to be less than $10 million.
The BBC called AOL's investment in Bebo “one of the worst deals ever made in the dotcom era.”
AOL’s apparent failure is the latest in a string of losses from media investments in social networking, The Guardian reported.
Rupert Murdoch's News Corp last year took a $450 million impairment charge on the $580 million it has invested in MySpace since 2005, while UK broadcaster ITV lost £150 million (€179 million) on Friends Reunited, which it sold for £25 million in 2009.
Enders Analysis analyst Ian Maude told The Guardian the string of losses proves that mergers and acquisitions don't work in the social networking sector. Such companies need to maintain their independence to survive.
Independently-run Facebook is shaping up to be the only major profitable social networking site, doubling its revenue last year to $800 million.