ITV (LSE: ITV) will drop Friends Reunited‘s annual £5 subscription fee to take the site free, Media Week claims, without attributing sources. The broadcaster bought the once-mighty social network for £120 million in December 2005 and, though it supposedly pulled in between £20 million and £25 million last year, it’s since been massively overshadowed on audience momentum by Bebo, Facebook, MySpace et al.

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ITV Consumer CEO Jeff Henry, at this month’s AOP conference, admitted Friends Reunited was “very out of date” and hinted at “exciting plans developing for its next iteration ... the challenge is the take Friends on to the next generation.” The broadcaster this month hired Telegraph Media Group online advertising director Gary Cole as head of revenue for not just ITV.com but “ITV.com and Friends Reunited” so it seems clear the site will join the New York Times, possibly the Wall Street Journal, the Financial Times and the growing crowd moving from premium content to free, ad-supported content. This would add meat to executive chairman Michael Grade’s hint, when he joined in August, that more areas of ITV.com would be made free.

ITV’s “turnaround plan” committed it to more than treble online revenue from last year’s £47 million to £150 million by 2010, with 75 percent coming from web display, video and local classified advertising. At the AOP event, a coy Henry appeared particularly confident about that ambitious target and refused to reveal the extent to which Friends Reunited will play a part in that. Question is - is this too late for Friends Reunited? The site may still be a cash generator, and it may reckon it can make still more cash by flipping the business model, but the original UK friends site has ceded significant ground in the public consciousness to the new social networking movement.