FriendFinder Shutting Down 5,000 Co-Branded Sites

Aug 14, 2012 2:15 PM PST

SUNNYVALE, Calif. — FriendFinder Networks Inc. has begun the process of shutting 5,000 co-branded websites, calling them " too cumbersome and cost prohibitive" to continue operating.

The move, announced today during a conference call on 2nd quarter financial numbers, shifts the focus of an affiliate network strategy to one that supports the further development of primary brands, which number about 100.

"It has become clear that our primary brands, which account for a majority of our revenue, are more manageable, profitable and ultimately offer the greatest opportunity for growth going forward," FriendFinder CEO Anthony Previte said.

Previte noted that the company still operates about 28,000 websites, but that the co-branded sites have given it the most problems, particularly those that also sell neutraceuticals, which credit cards have problems with.

"We find an ordinate amount of time and money is spent on dealing with high chargeback levels, and we end up paying fines," Previte said. "We don't own these brands so we are basically competing against ourselves. There are too many shades of gray and it puts too much burden on the company."

Closing the 5,000 sites will allow FriendFinder to develop its own brands and buy its own keywords, Previte said.

In the conference call, FriendFinder execs said revenue for the second quarter of 2012 was $81.1 million, but that it saw a loss of $7.4 million in the quarter. As of June 30, the company had outstanding principal debt of $510.7 million. 

FriendFinder Networks Inc. operates AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com. FriendFinder Networks Inc. also owns Penthouse magazine and its video production line and it also engages in brand licensing.

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