French Social Net Skyrock.com Seeking Sale To Telco, Talks Ongoing

This story was written by Robert Andrews.

Currently 70 percent owned by Axa Private Equity and 20 30 percent by Bellanger, Orbus last year decided on the separation to free it for international expansion, expecting to find an overseas partner for a 50/50 alliance. But it has now decided for an outright sale, bringing in all new shareholders.

"We are now in the process of that big conversation with several parties in order to find who will be the best partner for the next stage in our development, which is going to be global. We don't want to remain just a local player just because we didn't have the vision or the proper shareholders. Now the pace is accelerating," said Bellanger, who will sell his entire stake but who would stay on as the operation's head.

The founder has set his sights on selling to either an internet portal, a media company or a telco, with the latter receiving most attention because Skyrock.com sees mobile as the future of social networking. Bellanger drew comparisons with Vodafone's (NYSE: VOD) recent acquisition of Zyb and SK Telecom's (NYSE: SKM) Cyworld acquisition in South Korea. Discussions are taking place but he declined to name names.

More after the jump...

A youth culture phenomenon, Skyblog was started as an adjunct to France's leading independent radio station in 2002 and has grown in to not just the Francophone web's hottest property but also the world's ninth most popular social site and Europe's third, according to comScore (NSDQ: SCOR). The addition of 11 languages including English has seen it blossom in countries like Spain, Portugal and Italy, reaching 21 million members - a surprise, given France's mostly insular internet culture.

Bellanger: "Lots of people thought 'we are going to crush those frogs in the mud in a few weeks' - and it hasn't happened. We remained number one (in some markets) through the rise of Facebook and MySpace - still, we think that our future will be best assured by integration within a bigger ensemble."

Revenue has grown from less than 5 million ($7.7 million) in 2005, less than 10 million ($15.4 million) in 2006 and 15 million ($23.1 million) last year to a forecast 20 to 25 million ($38.6 million) in 2008. So the global opportunity is beckoning Bellanger to sell up: "The radio business in France, as in some other countries, is mostly stationary. On the other hand, our internet business was growing extremely fast and developing internationally. One has an international destiny, the other a national one." The sale would also involve Skyrock.com's TaSante.com health portal and Ladiz.fr user-generated teen girl mag.

Bellanger sees a sale to a media player helping to inject some social media culture in to a conventional operator, as MySpace did for News Corp (NYSE: NWS). but he spoke more of a "migration to mobility". Though Skyrock.com already has WAP carriage on Orange and Vodafone and i-mode on Bouygues, Bellanger reckons the potential is even greater because "social networking is the future of telecoms". "The conversation is on with those parties."

Highlighting AOL's (NYSE: TWX) Bebo acquisition, Belanger said he would not retain a minority stake because the ownership configuration rarely worked out. Despite international expansion, still Skyrock.com is more popular in Europe - logical candidates may include Telefonica's (NYSE: TEF) Terra internet division. Bellanger would retain his stake in the Skyrock radio station, which would be largely unaffected and would still be linked to the blog network by licensing the name to the site a la Virgin Radio. The priority for the station is to ensure it remains a mouthpiece of free speech for French youth. "It is, for me, 30 years of work," he said of the station.

By Robert Andrews