• Social networking site bought by ITV for £175m
• Peter Dubens understood to be in talks over £15m offer

The Friends Reunited social networking website was bought by ITV for £175m in 2005, but has remained problematic for the broadcaster. Photograph: Sarah Lee

Internet entrepreneur Peter Dubens has emerged as a potential bidder for Friends Reunited, offering to end ITV's disastrous experiment with online social networking at a massive 90% discount to what the broadcaster paid for the website four years ago.

ITV put Friends Reunited up for sale in February as the drop in online advertising revenues forced the company to dramatically writedown the value of a business that had cost it £175m.

Analysts believe Friends Reunited is worth about £20m to £40m, but private equity firm Oakley Capital is understood to have offered just £15m. Oakley is backed by Dubens, who also has connections through another investment vehicle with Michael Birch, the founder of rival networking site Bebo.

Despite speculation over the weekend that Oakley is in exclusive talks over a deal, ITV insiders maintain that several other parties are also interested and the price being suggested is very much at the bottom end of the range being discussed. An ITV spokeswoman refused to comment.

The broadcaster snapped up Friends Reunited for an initial £120m in cash, just before Christmas 2005, but it soon lost ground to newer rivals such as Facebook, MySpace, Bebo and more recently Twitter. While a move into geneology, allowing people to trace their family trees, saw the company increase repeat traffic to its websites, revenues have remained small.

In April last year ITV launched a last-ditch attempt to get back into the game, dumping Friends Reunited's so-called "pay wall" in favour of a free model. At the time it claimed 19 million people had registered since its launch in 2000, with 13 million of those using the site at least once in any 18-month period. That usage, however, is still paltry when compared with other sites such as Facebook.

Serial entrepreneur Peter Dubens snapped up a number of small internet service providers on the cheap when the dotcom bubble burst, including Homecall, set up by former Phones4U owner John Caudwell, and Bulldog, the residential broadband provider jettisoned by Cable & Wireless, and rolled them into his Pipex business. In 2007 he sold Pipex to Tiscali for £210m, now part of Carphone Warehouse's TalkTalk operation.

More recently Dubens, who was not available for comment, has become involved in a new digital media fund set up by Michael Birch, who became a multimillionaire when he sold his teenage social networking site Bebo to AOL.