AOL Acquires HuffPo For $315M
- by Gavin O'Malley @mp_gavin, February 7, 2011
Marking its most aggressive content play yet, AOL has agreed to buy The Huffington Post for $315 million.
"We believe in brands, quality journalism and the positive role of communities in the world," AOL CEO Tim Armstrong explained in an internal memo issued to all AOL employees on Monday about the HuffPo buy. "The Huffington Post shares our values and the combination of the two companies will create the premier global and local media company on the Internet."
As part of the deal, Huffington Post co-founder Arianna Huffington will become president and editor in chief of the Huffington Post Media Group within AOL, where she will oversee all of AOL's news properties, including Engadget and TechCrunch, along with Moviefone and MapQuest.
It also comprises AOL Media, AOL Local & Mapping, AOL Search and The Huffington Post.
AOL executive Jon Brod has been tapped to lead the overall operational integration of the combined entities, heading the local group integration and working closely with David Eun, president of AOL Media and Studios, and the teams in AOL Media.
Added Armstrong: "The Huffington Post is core to our strategy and our 80:80:80 focus -- 80% of domestic spending is done by women, 80% of commerce happens locally and 80% of considered purchases are driven by influencers. The influencer part of the strategy is important and will be potent."
The HuffPo acquisition will create what Armstrong is calling a "diverse digital ecosystem encompassing local, national and international news, politics, entertainment, technology, fashion, sports, health, personal finance, green, lifestyle, the arts and more."
Together, AOL and The Huffington Post will have 117 million un-duplicated domestic monthly unique visitors, and 270 million monthly worldwide, according to AOL.
Co-founded six years ago by Arianna Huffington and Ken Lerer, The Huffington Post is still growing at a healthy clip. Last year, it grew 22%, according to AOL.
Monday's announcement follows a number of recent acquisitions and partnership deals from AOL, including the acquisition of tech-centric TechCrunch, the social software startup Thing Labs, and video platform 5min Media.
"AOL is playing to win," Armstrong said on Monday. "The Huffington Post and AOL will occupy a unique place in the future of the Internet."
But while Armstrong continues to express confidence in AOL, the company's time is clearly running out. During the fourth quarter of 2010, AOL's total revenues fell 26%, while advertising sales plummeted 29%. Display -- especially domestic sales -- was the strongest component of AOL's fourth-quarter advertising pie, although its overall display revenues declined 14%, as international display sales dove 53%. Search and contextual sales also fell precipitously, dropping 34%.
Ms. Huffington is very smart in selling out at the peak of her company's value. Within the past few weeks two new potential media giants with deep pockets have come on the scene with significant digital news organizations and publications: 21st Century's dailypost.org and Rupert Murdoch's The Daily. Both look to be inherently superior to the liberal opinion-oriented Huffington Post.
Murdoch's is available for a monthly fee and only on iPad tablets. Its news is generated by about 100 previously unemployed print journalists. 21st Century's dailypost.org is available to everyone free at dailypost.org and, as a member of the Associated Press, its better and more extensive news offering is generated by the thousands of AP reporters around the world. It is reputed to be expanding with a tablet version similar to Murdoch's, but probably free.
These two organizations are national in coverage unlike most digital news sites which are associated with major market print products. They are also mainline, particularly dailypost.org, with no ties to specific industries such as The Wall Street Journal.
Both will probably survive and prosper in the years ahead. But since we live in a free enterprise world where better products with lower prices are favored, dailypost.org is likely to end up on top while the Huffington Post slowly withers away with AOL.