AOL to Sell or Close Bebo by June

After acquiring Bebo for $850 million in 2007, AOL announced today that it plans to shut down or sell the ailing social network by the end of next month, in order to focus on its premium content and advertiser offerings.

In a statement sent to employees today, the company said it is “evaluating strategic alternatives” for the property as a result of what it describes as “heavy competition” from other social networking players – such as Facebook and Twitter.

“Social networking is a space…where scale defines success. Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking,” the statement read.

The company added that it would pursue the strategy it outlined in May 2009, “leveraging core strengths and scale in quality content, premium advertising and consumer applications.”

It intends to complete its “review” process by the end of May, which suggests interest has already been received from potential buyers. However, an AOL spokesperson insisted the process of searching for a buyer had only begun today, following this afternoon’s announcement.

AOL has repeatedly stressed its intention to focus on building quality content, and to attract premium advertisers to underwrite it. Typically, social networks have had difficulty attracting ad spend from big brands, and – as the company notes in its statement – require large scale and reach to monetize successfully.

Bebo has been hemorrhaging users over the past year, even in the U.K. where the majority of its user base lies. According to data from comScore, the network attracted around 8.5 million unique visitors in May 2009, and just 4.7 million in February 2010, representing a decline of almost 50 percent in just eight months.

AOL will make its annual filing for Bebo in the U.K. with Companies House tomorrow.