Is The Future Bright for Brightsolid?

“In an expanding market, followers can make money too.”

Have you ever wondered what happened to Friends Reunited? Well, after being sold to ITV for £120 million in 2005 it rather languished. Although a first mover in the social networking world that we all live in today, it was somewhat overtaken by Facebook, which came on the scene four years later.

Friends Reunited is now owned by Brightsolid, itself a subsidiary of DC Thomson, the Dundee-based publishers of The Beano and The Dandy among many others. It bought Friends for a mere £25m in 2009 mainly, it seems, for its Genes Reunited sister site. This and its Find My Past site were largely responsible for a 75 per cent increase in sales to £28.4m in the year to March 2011, making £1.3m operating profit along the way.

The company is involved in a number of digitising projects to make more historical content available online, and it has now set its sights on expanding its genealogy business into the US. Ancestry.com dominates the US market with 1.75m subscribers; and reported revenues up 22 per cent to $400m in 2011.

Brightsolid are investing “millions” in expanding into the US market, opening a Los Angeles office and securing genealogical records from the American national archive and census records.

To me, this all makes a lot of sense. First, it is a good move for DC Thomson to build a stronger online publishing presence in this day and age. Second, it looks like there is still un-tapped demand for genealogical data and services in the Western world and in a strongly growing market “placing your boat in a fast-moving stream” is a very successful strategy. It also helps that the US market model has been proven by Ancestry.com, who are not only growing but making a profit too.

Brightsolid is likely to build value for its owners through this geographic diversification and my hunch is that there is a great return to be had on the relatively small amounts of capital being invested here with only moderate risk. The company may be up against a much more established player but there looks to be demand enough for both of them. In Ancestry.com Brightsolid also has a ready-made potential acquirer too if all goes well.

While Friends Reunited, under ITV control, seemed to lose the plot, Brightsolid has been smart in buying an undervalued asset and is now about to leverage it. There is often a window of opportunity to leverage a business and that window now looks open for Brightsolid onto the online genealogy world.

Mark

 

 

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