AOL Buys The Huffington Post — and Why It Matters

Hard to believe, but The Huffington Post is six years old. When it was launched by Arianna Huffington in 2005 with $1 million, it was one of the vanguards of the Internet newspaper revolution that would eventually lead to the demise of many a traditional newspaper.

Now AOL has made a bold move to acquire The Huffington Post, plunking down $315 million for the online property — $300 million in cash and the remainder in stock, according to the New York Times. This is the biggest of AOL’s buys since it parted ways with Time Warner in 2009.

There are several implications to the deal that are worthy of note. For one thing, it represents a big thaw in acquisition money and could be one of a string of mergers and acquisitions for online companies, which could be good news for the economy. Tim Armstrong, AOL’s CEO, said Sunday, “This is a statement that the company is making investments, and in this case a bold investment, that fits right into our strategy.”

For AOL, in fact, this isn’t just an acquisition – it’s the beginning of a strategy that Armstrong thinks will help reverse the company’s fortunes. According to the Times, he sees buying The Huffington Post as a way to expand AOL’s “news gathering and original content creation.”

Part of the deal is the elevation of Arianna Huffington herself. She will become President and Editor-in-Chief of the “Huffington Post Media Group,” an AOL unit that “will give her oversight not only of AOL’s national, local and financial news operations, but also of the company’s other media enterprises like MapQuest and Moviefone,” writes the Times. The risk for AOL is that Huffington has been a very public figure of the political left – even though she said her political views “would have no bearing on how she ran the new business.”

Armstrong and Huffington think there is synergy between The Huffington Post’s strength as an online community and AOL’s Patch, a local news initiative, and Seed, a citizen journalist operation. But Politics Daily and Daily Finance, two AOL news sites, may be folded into The Huffington Post.

What AOL really may be getting out of the deal is access to eyeballs. With 25 million visitors every month, and articles that draw thousands of comments, The Huffington Post could grow into an enterprise that has the potential to reach more than 100 million visitors in the U.S. on a monthly basis.

To be blunt, The Huffington Post is an online winner, adding readers and employees in the last few years. In contrast, AOL has been trying to find its own voice since 2009. The company jettisoned a third of its staff last year, ad revenue dropped 29 percent from the year before, and fourth quarter revenue was down 26 percent.

For AOL, then, The Huffington Post could be the shot of adrenaline needed to turn around its business. Tim Armstrong knows it. “The reason AOL is acquiring The Huffington Post is because we are absolutely passionate, big believers in the future of the Internet, big believers in the future of content.”

 

About Barry Silverstein

Barry Silverstein is a freelance writer/marketing consultant. In addition to writing for ReveNews, he is a contributing writer to Brandchannel.com, the world’s leading online branding forum. He is the author of three marketing books, The Breakaway Brand (co-author, McGraw-Hill, 2005), Business-to-Business Internet Marketing (Maximum Press, 2003) and Internet Marketing for Technology Companies (Maximum Press, 2003). Barry ran his own Internet and direct marketing agency for twenty years. You can find Barry on Twitter @bdsilv.

2 Responses to AOL Buys The Huffington Post — and Why It Matters

  1. @djambazov says:

    Having a variety of voices and the freedom to use those voices is what makes properties like Huffington Post and Techcrunch (and many others) valuable. The concern is whether or not that freedom of voice will be subsumed by corporate giants.

    As the often long-winded Keith Olberman said about his agreement to host a show on Current.TV: "Nothing is more vital to a free America than a free media, and nothing is more vital to my concept of a free media than news that is produced independently of corporate interference."

    What is true of news is true of content.

  2. I like the huffington post. I just don’t think it’s worth 300 million dollars.