Thread: AOL to buy online Huffington Post for $315 MILLION

AOL to buy online Huffington Post for $315M

NEW YORK (AP) — Online company AOL is buying online news hub Huffington Post in a $315 million deal that represents a bold bet on the future of online news.

The acquisition announced early Monday puts a high-profile exclamation mark on a series of acquisitions and strategic moves engineered by AOL CEO Tim Armstrong in an effort to reshape a fallen Internet icon. AOL was once king of dial-up online access, known for its ubiquitous CD-ROMs and "You've got mail" greeting in its inboxes.

Perhaps just as important as picking up a news site that ranks as one of the top 10 current events and global news sites, AOL (AOL) will be adding Huffington Post co-founder and media star Arianna Huffington to its management team as part of the deal.

After the acquisition closes later this year, Huffington will be put in charge of AOL's growing array of content, which includes popular technology sites Endgadget and TechCrunch, local news sites Patch.com and online mapping service Mapquest.

The price that AOL is paying is "really just the hiring fee to get Arianna," said technology analyst Rob Enderle. "This is one of those out-of-left-field moves that actually makes a lot of sense. This could put AOL back on the map."

CONFERENCE CALL: AOL, Huffington talk with analysts
HUFFINGTON POST: When HuffPost Met AOL
READ: AOL's statement on the deal
AOL EARNINGS: Net rose, but revenue dropped in Q4.
Armstrong, a former Google executive, has been trying to turn AOL into a go-to place for a wide variety of news since he was hired to turn around the company in April 2009 while it was still a part of Time Warner. The makeover is designed to give Web surfers a reason to visit AOL's websites more frequently to help boost online ad sales.

At the same time, Armstrong has laid off hundreds of employees in an effort to boost AOL's financial performance and stock price. It has been a slog so far. AOL lost $782.5 million last year, largely because of accounting charges, and the company's stock is now worth slightly less than after it was spun out of Time Warner 14 months ago.

The deal "will create a next-generation American media company with global reach that combines content, community, and social experiences for consumers," Armstrong said in a statement announcing the deal.

Founded in 2005, Huffington Post is owned by Arianna Huffington, Kenneth Lerer and a group of other investors. The site attracts 25 million monthly visitors. AOL will pay $300 million of the purchase price in cash.

Putting Arianna Huffington into a position of power could eventually threaten Armstrong's job security if AOL still struggles, Enderle said.

"This is a gutsy move on (Armstrong's) part because Arianna could end up running AOL," Enderle said.

In a blog post about the deal, Arianna Huffington praised Armstrong's vision for AOL and said they are on the same page as they discussed their ambitions for online news. "We were practically finishing each other's sentences," Huffington wrote about their discussions. She wrote that the deal was signed at the Super Bowl in Dallas, which she and Armstrong attended.

If it wins expected regulatory approval without any hitches, the deal will likely close in late March or early April.

Armstrong has been an aggressive deal maker since his arrival, but this marks by far the biggest acquisition of his tenure. Various published reports quoting unidentified people have also said he has talked to private equity firms about the possibility of trying to buy Yahoo, another struggling Internet pioneer that remains a household name. Yahoo CEO Carol Bartz, though, has shown little interest in working with AOL.

AOL had just a 5.3% share of the U.S. display advertising revenue in 2010, down from 6.8% in 2009, according to eMarketer. Facebook, meanwhile, accounted for 13.6% of display revenue last year, up from 7.3% in 2009.

Huffington Post grew quickly from start-up to online colossus and ranks as one of the top 10 current events and global news sites. Over time, it launched city-specific pages and developed a roster of sections such as food and books. The work of its 70-person paid staff is augmented by content from news outlets and 6,000 bloggers who write for free.

http://www.usatoday.com/money/media/201 ... titialskip

The work of its 70-person paid staff is augmented by content from news outlets and 6,000 bloggers who write for free.

Bloggers work for free because they are sitting around making stuff up for others to post as "NEWS".
Their fake news is all over the internet.

Huffington will be put in charge of AOL's growing array of content

can we expect AOL news and stories to stay in line the way the HuffPost sides with the opposition

Originally Posted by jamesw62

Huffington will be put in charge of AOL's growing array of content

can we expect AOL news and stories to stay in line the way the HuffPost sides with the opposition

Probably.

What will AOL-Huffington Post merger mean?

By Bryony Jones for CNN
February 7, 2011 1:37 p.m. EST

Arianna Huffington set up the left-leaning Huffington Post in 2005 as an alternative to the right-wing Drudge Report.

(CNN) -- Internet provider AOL is to buy news and blog website The Huffington Post for $315 million, the latest in a long line of innovative start-ups snapped up by established big-name firms.

According to their figures, the sale creates one of the most widely read online media organizations.

So what will the merger mean for the two companies, and for the online news industry as a whole?

What does it bring to AOL?

For its $315 million investment, AOL is buying itself a fashionable and rapidly growing brand popular among center-left circles in the U.S. and overseas.

AOL's chairman and CEO, Tim Armstrong, said he hoped the purchase would "create a next-generation American media company with global reach."

Digital media commentator Kara Swisher, of All Things Digital, says AOL have secured growth, excitement, and most importantly, an identity.

"AOL doesn't really stand for anything, it doesn't have a brand or an image, and they've just bought themselves the most valuable profile on the internet."

And how does it benefit The Huffington Post?

Arianna Huffington, co-founder and editor of The Huffington Post, will become president and editor-in-chief of the merged group's combined media division.

In return, The Huffington Post will have access to content from AOL's other sites, including video and technology news.

"It's good for the investors," says Swisher. "They look great.

"The company was moving slowly, they could either sell or go public, and they weren't really in a position to go public, so this was the best option -- and it's a lot of money."

Will it change The Huffington Post?

Arianna Huffington insists any changes will be positive ones: "The Huffington Post will continue on the same path we have been on for the last six years -- though now at light speed...

"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," she said in a statement.

Swisher says the Huffington Post will likely maintain its "left-ish" political stance, but notes that the site is not as left-leaning as some would believe.

"She's [Huffington] been going more central, she's certainly the most vocal critic of the Obama administration from the Democratic side."

What will the move mean to the market?

AOL and The Huffington Post say the newly merged group will have a combined 117 million unique visitors a month in the U.S. and 270 million around the world, potentially making them the most-read online media group in the world.

Swisher says the problem facing media companies nowadays is that "young people don't go to destination websites any more - they 'snack' all over the place" and firms have to find ways to feed that hunger.

Is the link-up part of a wider trend?

The marriage between The Huffington Post and AOL is the latest in a long line of innovative online "upstarts" snapped up by more established traditional firms.

Last November, troubled publishing giant Newsweek merged with relative newcomer The Daily Beast, founded just two years ago by former Vanity Fair editor Tina Brown.

"Companies shouldn't think 'print' or 'online' anymore," says Swisher. "They are media companies. Rupert Murdoch, for example, sees the writing on the wall, which is where The Daily comes from."

Will it succeed?

Previous old school-new media mergers have had a mixed record. Social networking stars such as Bebo and MySpace faded after they were bought out by AOL and News Corp. And let's not forget the merger in 2000 between AOL itself and Time Warner, parent company of CNN, described by some sober-minded analysts as the worst business deal in history.

Swisher says this time around, it's all in the execution. "The concept is a great idea -- in theory.

"It will all come down to the execution: If they're able to create content people want to read, if they keep on making good stuff, growing the audience, and if it makes money from advertising.

"AOL is trying to revive itself -- we shouldn't assume it's not going to succeed just because there have been issues before.

"It is a bold declaration of strategy: He's [Armstrong] got all the pieces now -- let's see what he does with them."

http://www.cnn.com/2011/BUSINESS/02/07/ ... gletoolbar

Op-Ed

AOL ♥ HuffPo. The loser? Journalism

To grasp the Huffington Post's business model, picture a galley rowed by slaves and commanded by pirates.

By Tim Rutten
February 9, 2011

Whatever the ultimate impact of AOL's $315-million acquisition of the Huffington Post on the new-media landscape, it's already clear that the merger will push more journalists more deeply into the tragically expanding low-wage sector of our increasingly brutal economy.

That's a development that will hurt not only the people who gather and edit the news but also readers and viewers.

To understand why, it's helpful to step back from the wide-eyed coverage focused on foundering AOL's last-ditch effort to stave off the oblivion of irrelevance, or Brentwood-based Arianna Huffington's astonishing commercial achievement in taking her Web news portal from startup to commercial success in less than six years.

The media-saturated environment in which we live has been called "the information age" when, in fact, it's the data age. Information is data arranged in an intelligible order. Journalism is information collected and analyzed in ways people actually can use. Though AOL and the Huffington Post claim to have staked their future on giving visitors to their sites online journalism, what they actually provide is "content," which is what journalism becomes when it's adulterated into a mere commodity.

Consider first AOL's pre-merger efforts, which centered on a handful of commentators and a national network of intensely local news sites called Patch. The quality of those efforts varies widely, but the best ones are edited by journalists who lost their jobs in the layoffs and buyouts that have beset traditional news organizations over the last decade. These editor-reporters are given reasonable benefits and salaries that are about what beginning reporters at major newspapers were paid three decades ago. Their contributors, by contrast, are paid a maximum of $50 an article, often less.

The results pretty much conform to the old maxim that you get what you pay for; the best Patch journalism almost invariably is being done by experienced journalists who do the work out of idealism or desperation. What happens when that pool of exploitable surplus labor dries up — as it will with time — is anybody's guess, but the smart money would bet on something that isn't pretty.

That's borne out by a memo from AOL Chief Executive Officer Tim Armstrong on where his company's journalism is going. It's fairly chilling reading, ordering the company's editors to evaluate all future stories on the basis of "traffic potential, revenue potential, edit quality and turnaround time." All stories, it stressed, are to be evaluated according to their "profitability consideration." All AOL's journalistic employees will be required to produce "five to 10 stories per day."

Note all the things that come before the quality of the work or its contribution to the public interest and you've arrived at an essential difference between journalism and content. It may start with exploiting reporters and editors, but it inevitably ends up exploiting its audience.

The other partner to this dubious arrangement is the Huffington Post, which is a new-media marvel of ingenuity, combining a mastery of editing geared to game the search engines that stimulate Web traffic and overhead that would shame an antebellum plantation. The bulk of the site's content is provided by commentators, who work for nothing other than the opportunity to champion causes or ideas to which they're devoted. Most of the rest of the content is "aggregated" — which is to say stolen — from the newspapers and television networks that pay journalists to gather and edit the news.

The Huffington Post is a brilliantly packaged product with a particular flair for addressing the cultural and entertainment tastes of its overwhelmingly liberal audience. To grasp its business model, though, you need to picture a galley rowed by slaves and commanded by pirates. Given the fact that its founder, Huffington, reportedly will walk away from this acquisition with a personal profit of as much as $100 million, it makes all the Post's raging against Wall Street plutocrats, crony capitalism and the Bush and Obama administrations' insensitivities to the middle class and the unemployed a bit much.

The fact is that AOL and the Huffington Post simply recapitulate in the new media many of the worst abuses of the old economy's industrial capitalism — the sweatshop, the speedup and piecework; huge profits for the owners; desperation, drudgery and exploitation for the workers. No child labor, yet, but if there were more page views in it…

timothy.rutten@latimes.com

http://www.latimes.com/news/opinion/com ... 565.column