The most noteworthy bit of the AOL acquisition of HuffPo (aside from the price, which I assume will leak out sooner rather than later) is Arianna will run the AOL unit that will include the old HuffPo plus a bunch of other content businesses. It’s a pretty significant new media empire. From the joint announcement:
The new group will have a combined base of 117 million unique visitors a month in the United States and 270 million around the world**. Following the close of this transaction, AOL will accelerate its strategy to deliver a scaled and differentiated array of premium news, analysis, and entertainment produced by thousands of writers, editors, reporters, and videographers around the globe.
As part of the transaction, Arianna Huffington, The Huffington Post’s co-founder and editor-in-chief, will be named president and editor-in-chief of The Huffington Post Media Group, which will include all Huffington Post and AOL content, including Engadget, TechCrunch, Moviefone, MapQuest, Black Voices, PopEater, AOL Music, AOL Latino, AutoBlog, Patch, StyleList, and more.
It also appears HuffPo will be the gateway:
“This is truly a merger of visions and a perfect fit for us,” said Huffington. “The Huffington Post will continue on the same path we have been on for the last six years – though now at light speed – by combining with AOL. Our readers will still be able to come to the Huffington Post at the same URL, and find all the same content they’ve grown to love, plus a lot more – more local, more tech, more entertainment, more finance, and lots more video. We are fusing a legendary and powerful new media brand with a vibrant, innovative news organization, known for its distinctive voice, a highly engaged audience, an expertise in community-building, and a track record for demystifying the news and putting flesh and blood on the data while drawing our audience into the conversation.”
AOL’s business is struggling as it attempts to make its transition from its roots as a subscription-based service for connecting to the Internet to an ad- supported digital media company. The company faces declines in revenues and traffic to its sites. In the fourth quarter, AOL’s ad revenue, the focus of the company’s turnaround strategy, dropped 29%. Mr. Armstrong has said that he expects the company to achieve growth during the second half of the year.
The Huffington Post acquisition marks the largest deal the company has made since Mr. Armstrong started as chief executive in April 2009. AOL went on a shopping spree in September, buying up the TechCrunch blog, online video company 5min Media and Web-based software company Thing Labs Inc. The three were relatively small buys.
The interesting question is whether AOL think it is getting Huffington Post (as in infrastructure, brand name, existing readers) or this is the means of getting Arianna (meaning Arianna as the Tina Brown of new media). Note those aren’t mutually exclusive; the price could easily include some of each. And big companies have paid more and effectively wound up only with a senior executive. Our favorite example is Vikram Pandit, the $800 million man.