AOL Buys Huffington Post « naked capitalism

Monday, February 7, 2011

AOL Buys Huffington Post

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.”

Update 1:00 AM: That was fast. The WSJ has the sale price, $315 million, $300 million of that in cash. And more word as to why AOL was eager to do the deal:

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.

36 Comments:

Deus-DJ says:

February 7, 2011 at 12:31 am

Wow…how fortunate for AOL. Well, as long as content doesn’t change this is a win for them unless they overpaid.

Paul Repstock says:

February 7, 2011 at 12:39 am

Deus…money is irrelevant when one has access to the press (money printing variety, that is), one would expect less contoversy from Hufpo under new ownership. The apearance of management continuity as probably one of the main clauses in what was obviously a very fat price tag.

LOL, I wonder how big Yves’ offer will be???..:)
- Deus-DJ says:
  
  February 7, 2011 at 12:54 am
  
  From a corporate finance perspective…deals like this typically kill shareholder value, but HuffPost is very valuable…
  - Paul Repstock says:
    
    February 7, 2011 at 1:05 am
    
    Only “valuable”, because of performance in the distant past. This deal may have been in the works for some time. HufPo has toned down so much that it now apears ‘tame’, and I’ve heard stories of suppresion of fringe voices.
    
    AOL and current subscribers now both have a “safe” place to appear controversial..lol

lark says:

February 7, 2011 at 12:37 am

I would bet HuffPo will be be politically neutered by being absorbed into corporate America.

Parvaneh Ferhad says:

February 7, 2011 at 3:07 am

It always seemed to me that HuffPo and Arianna were already very much part of and tied into corporate America…
Jack Rip says:

February 7, 2011 at 9:14 am

I’ll join Ferhad on Huffpo. This Obama center, I never saw a poor person, fake leftists and empty talkers has always been main media. For my taste, reading the NYT and HuffPo is/was about the same; however, the previous is less bombastic and more concise.
- ChrisTiburon says:
  
  February 7, 2011 at 11:05 pm
  
  If you want the real thing listen to a Pacifica station.

haha says:

February 7, 2011 at 12:56 am

http://www.huffingtonpost.com/2011/01/21/aols-dirty-little-secret-_n_812307.html

How long till this article about how 60% of AOL rev is idiots being parted from their money is removed.

bob says:

February 7, 2011 at 12:59 am

My first thought also…

Skippy says:

February 7, 2011 at 1:04 am

The “Squeaky Wheel gets the Grease” monetary that is, all backed by a bubbling pool….eh.

Skippy…We will repeat.

Paul Repstock says:

February 7, 2011 at 1:10 am

Too right mate..:)

I wonder what kind of deal will be offered to get that squeeky Egyptian wheel to roll off stage and quit causing embarasing noises?

/L says:

February 7, 2011 at 1:07 am

“AOL has agreed to purchase The Huffington Post for $315 million, approximately $300 million of which will be paid in cash funded from cash on hand. The Huffington Post is privately owned by its two cofounders, as well as a group of investors.”
From the joint announcement

Deus-DJ says:

February 7, 2011 at 1:11 am

315 Million huh? Well, they may or may not have overpaid. Given the clientele of huffpost it is now the question of whether those visitors would go into AOL’s other, moneymaking areas so this deal actually pays off. My hunch? It won’t.

Paul Repstock says:

February 7, 2011 at 1:15 am

I’ll bid a Billion two for Naked Cap if mouth Yves stays on..:)
- Paul Repstock says:
  
  February 7, 2011 at 1:16 am
  
  I meant..’mouthy Yves’..lol
ChrisTiburon says:

February 7, 2011 at 11:44 am

What a great advertising demographic! Squealing women wearing Pakistani earrings who call themselves goddesses and and are spending their husband’s money on green products and questionable social utility.

David Plainview says:

February 7, 2011 at 1:19 am

I doubt very much if it will be the same. They will corporatise HuffPo to the gills. I was just starting to think it might turn into something special with Peter Goodman jumping ship from NYT. Oh well, it was slowly turning into a soft porn site anyway….

YVES,
Did you catch Christopher Hitchens most recent writings in Slate on Reagan’s legacy??? You should pop it into NC links tonight, if you haven’t.

jerrydenim says:

February 7, 2011 at 1:48 am

If Arianna was in it all along for the money, good for her I guess, but this deal certainly won’t do anything for her site except make it dumber, more corporate, less relevant and it will result in an even more clunky, overcrowded, annoying interface choked with advertising. Maybe she sensed the Huffington Post had already reached its high water mark and figured she should sell out while she could still get a good price. Mark Zuckerburg should pay attention.

I wonder when the Huffington post is going to do another exposé on net neutrality?

A guess a net worth of well over a 100 mil wasn’t enough.
R.I.P HuffPo 2005-2011

David Plainview says:

February 7, 2011 at 2:53 am

Jerrydenim, can you imagine the first meeting between AOL and Miss Huffington???

AOL’s head of Marketing (i.e. Head of bullshit and Lies): “Well Miss Huffington, we’re thinking of going in a “fresh” direction, something which connects to teenage angst, and yet the perennially underemployed stuck to their computer chairs can relate to. But we’ll let you decide: 1.Pop-up window ad for menstrual pads 2. Pop-up ad for Christina Aguilera’s new ‘Yes I Dress Like a Whore’ digital download 3. Pop-up ad for Glenn Beck’s new ‘Gold For White Trash Success Kit’
Which do you prefer Miss Huffington?”

Huffington: “Daaawwling I dink I feel dizzy now”………thud
- Maju says:
  
  February 7, 2011 at 4:06 am
  
  Are there still popup ads on the net? Since I block cookies, javascript and popup windows by default, I do not notice… Guess there’s still people using Microsoft IE somewhere… :/
  - David Plainview says:
    
    February 7, 2011 at 4:51 am
    
    Maju,
    Whatever you want to call them, “pop-up” or whatever, there are still ads “embedded” into the site code (or whatever terminology you want to use) are still INVASIVE , the POINT I am making is the same—YOU CAN”T SEE THE CONTENT THAT YOU WANT TO SEE WITHOUT WAITING OR HITTING 5 CLOSE BUTTONS.
    
    What do you want next, a ribbon or a smiley face sticker because you threw away your Walkman 8 years ago??? Damn…. You can ask Andrew Sullivan if the hell his readers went through with his new blog interface some months ago had anything to do with what damn browser they use.
    - Aquifer says:
      
      February 7, 2011 at 10:22 am
      
      Try Firefox and add Adbloc Plus. I switched from Safari to use this add-on and it makes a big difference
  - Banchan says:
    
    February 7, 2011 at 5:34 am
    
    People using AOl are still using Microsoft IE, ouch

emca says:

February 7, 2011 at 2:37 am

I’m also not sure what AOL is looking for. Huffpo struck me as a left-leaning site with entertainment trash thrown in.

The left-talk/entertainment angle is found in local news sheets throughout urban landscapes; will this be a trend on the national level?

Hats off to Arianna though.

Name (required) says:

February 7, 2011 at 3:56 am

I’ve been a regular Huffpost reader for three or more years but it has certainly lost the bite and perception which drew it to me in the first place, and the site’s server was becoming inordinately slow to respond.

I guess Arianna has decided that if you can’t beat ‘em you might as well join them, but I for one will now delete the Huffpost from my Bookmarks page and begin a search for its replacement there.

econimus says:

February 7, 2011 at 9:55 am

Wow, most people’s comments here really miss the point here. Let me give you something to think about…HuffPo is one of the highest traffic sites for blogs. Period. Now, if I were going to build a digital media powerhouse of brands that suck in advertising revenue like a Hoover, what would I do? If I wanted to form a left counterpoint to the likes of Murdoch what might I do and where might I begin? From a strategic business standpoint, what the market is missing is a juggernaut the size of the right’s one. The market is certainly there and demographics are on its side (younger more digitally oriented people are far less conservative than the older ones).

So put the comments about corporatism etc aside and think. Because this is a brilliant business decision in the long run if this is the way it’s going.

Renodino says:

February 7, 2011 at 9:58 am

AOL audience is very conservative. This is a bad fit. There will be mass defections.

Doc Holiday says:

February 7, 2011 at 10:09 am

AOL’s business is struggling … as usual! There goes Huff down the tubes, oh well. Never spent much time there, and now that AOL is there, time to move on.

ChrisTiburon says:

February 7, 2011 at 12:13 pm

“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…”

Ads? What ads? Use Firefox and their free ad on
AdBlock Plus, you’ll never see another ad again, plus sites will load faster. Set your Firefox preferences to
“never remember history” and there will be zero cookies stored on your hard drive. Don’t forget Flash Flush to scrub the flash cookies stored in their resident software.

Doc Holiday says:

February 7, 2011 at 10:14 pm

Don’t forget Flash Flush to scrub the flash cookies stored in their resident software.

==> I like to set my space for the cache at zero … makes me feel free and easy, somewhat weightless and less moody. I think the default is about 50MB … don’t get me started on the gigs+of wasted drive space … and yes, even Firebloat .. I mean Firefox, what a hog that grows almost every day, I mean every night, while your asleep … unplug your cable at night, unless you want Firefox updating your system .. never mind.
- ChrisTiburon says:
  
  February 7, 2011 at 11:11 pm
  
  Thanks Doc for the cache info.
  
  I just CommandQ when I go to bed to quit the browser and scrub everything, close video, hit Flash Flush and when I open in the morning, it’s a fresh start.
  
  One amazing feature on AdBlock Plus is the ability to see what it is blocking, mainly the dozens, sometimes
  almost hundreds, of scripts and outside ad servers that it prevents from loading on the page you are looking at.

Hugh says:

February 7, 2011 at 2:05 pm

Everyone on the media side of the web is trying to find a profitable business model. Still this seems an odd pairing. Both sides seem like they are looking to lean on the other. The HuffPo may have been looking to AOL’s deep pockets, deep pockets which it may not have. AOL may be looking at HuffPo as cutting edge, which it isn’t, to reverse its declining fortunes. You never know, it may work, but there sure seems to be lots of room for serious misunderstanding of basic goals.

I haven’t paid much attention to the HuffPo for years. My understanding is that what made it profitable to Huffington and her backers was that she didn’t pay for most of the content, i.e. what the writers wrote, only a few got paid but even most of these didn’t get much.

Ideologically, the HuffPo and Huffington herself are, like Moulitsas and dailykos, more Democratic party oriented than liberal. Since the Democratic party is corporate oriented, this tie-up between the HuffPo and a regular corporation isn’t that surprising.

There does seem to be a lot of this going on in this part of the “Democratic” blogosphere. Salon just changed editors and has been having financial problems. OpenLeft just closed shop. Firedoglake recently announced they were moving toward an “NPR-like” membership model. Soros donated a million to Media Matters 3-4 months ago. I’m not sure about dailykos. The word was that Moulitsas had much more profitable sports websites that bankrolled it.

nowhereman says:

February 7, 2011 at 2:38 pm

Wow, I didn’t know AOL still existed. Paid cash? Where have I been?

Elliot X says:

February 7, 2011 at 5:32 pm

Huffpo was already down the drain. This won’t make any difference.

“We live in a world where there is more and more information, and less and less meaning.” – Jean Baudrillard

Omar's Coming says:

February 7, 2011 at 9:22 pm

Although I lost some interest in HP,I didn’t think that Arianna would go that corporate.
The site is pretty heavily censored for comments. Which made me lose interest.
I have a hard time seeing her staying with AOL. However money is THE motivator. My money is on her jumping ship after awhile. If she doesn’t it won’t be the first time that I have been disapointed.

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