Figured this was interesting enough that it deserved a thread, since I have no idea where it'll end up. Last time AOL bought a major media company, it cost >100x more, and totally flopped. In this case, they're buying an honest to goodness innovator, and trying to salvage themselves.

The Huffington Post, which began in 2005 with a meager $1 million investment and has grown into one of the most heavily visited news Web sites in the country, is being acquired by AOL in a deal that creates an unlikely pairing of two online media giants.

 

The two companies completed the sale Sunday evening and announced the deal just after midnight on Monday. AOL will pay $315 million, $300 million of it in cash and the rest in stock. It will be the company’s largest acquisition since it was separated from Time Warner in 2009.

 

The deal will allow AOL to greatly expand its news gathering and original content creation, areas that its chief executive, Tim Armstrong, views as vital to reversing a decade-long decline.

 

Arianna Huffington, the cable talk show pundit, author and doyenne of the political left, will take control of all of AOL’s editorial content as president and editor in chief of a newly created Huffington Post Media Group. The arrangement 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.

 

By handing so much control over to Ms. Huffington and making her a public face of the company, AOL, which has been seen as apolitical, risks losing its nonpartisan image. Ms. Huffington said her politics would have no bearing on how she ran the new business.

 

The deal has the potential to create an enterprise that could reach more than 100 million visitors in the United States each month. For The Huffington Post, which began as a liberal blog with a small staff but now draws some 25 million visitors every month, the sale represents an opportunity to reach new audiences. For AOL, which has been looking for ways to bring in new revenue as its dial-up Internet access business declines, the millions of Huffington Post readers represent millions in potential advertising dollars.

I have to say, AOL is doing a nice job at trying to reinvent itself into a media company after they realized their online service was dying.

 

One problem though: 80% of the AOL's profit comes from Scamming Old People

'[M]any of [AOL's subscribers] are older people who have cable or DSL service but don't realize that they need not pay an additional twenty-five dollars a month to get online and check their e-mail. "The dirty little secret," a former AOL executive says, "is that seventy-five per cent of the people who subscribe to AOL's dial-up service don't need it"'

....

Auletta estimates that these subscriber revenues generate 80% of the AOL's profit. How much is that? In the third quarter of last year these suspect subs generated about $244 million! All because AOL subscribers don't know they don't have to pay anymore.

AOL is done, and has been for a while.

AOL is done, and has been for a while.

 

They own mapquest, moviephone and now the huffington post. That's how many hundreds of millions of site visits a day? They're far from "done."

Edited February 7, 201115 yr by Jenksismybitch

They own mapquest, moviephone and now the huffington post. That's how many hundreds of millions of site visits a day? They're far from "done."

 

Visits per day mean nothing. Their dwindling profits and money losing ventures are why they're done.

 

Moviephone? Seriously, they were big in 1997, they're nothing now. Do they even make money with this?

 

Mapquest? Nobody uses mapquest. Again, wheres the money from these millions of hits per day?

 

Huffington Post is good, but they paid hundreds of millions of dollars for something that cost 1 million to start...again, they overpaid...I haven't looked at Huffposts books, so I don't know how profitable this company is, and I don't know if they're growing in profits, etc...

 

Profits mean everything. Site visits, which you quote, mean s***.

 

AOL's current earnings per share for end 2010: NEGATIVE $7.43.

 

Yea, your right, they're not done...they're doing swimmingly well!

Visits per day mean nothing. Their dwindling profits and money losing ventures are why they're done.

 

Moviephone? Seriously, they were big in 1997, they're nothing now. Do they even make money with this?

 

Mapquest? Nobody uses mapquest. Again, wheres the money from these millions of hits per day?

 

Huffington Post is good, but they paid hundreds of millions of dollars for something that cost 1 million to start...again, they overpaid...I haven't looked at Huffposts books, so I don't know how profitable this company is, and I don't know if they're growing in profits, etc...

 

Profits mean everything. Site visits, which you quote, mean s***.

 

AOL's current earnings per share for end 2010: NEGATIVE $7.43.

 

Yea, your right, they're not done...they're doing swimmingly well!

 

you're right, you aren't privy to their books.

Visits per day mean nothing. Their dwindling profits and money losing ventures are why they're done.

 

Moviephone? Seriously, they were big in 1997, they're nothing now. Do they even make money with this?

 

Mapquest? Nobody uses mapquest. Again, wheres the money from these millions of hits per day?

 

Huffington Post is good, but they paid hundreds of millions of dollars for something that cost 1 million to start...again, they overpaid...I haven't looked at Huffposts books, so I don't know how profitable this company is, and I don't know if they're growing in profits, etc...

 

Profits mean everything. Site visits, which you quote, mean s***.

 

AOL's current earnings per share for end 2010: NEGATIVE $7.43.

 

Yea, your right, they're not done...they're doing swimmingly well!

 

I use moviephone all the time for my movie time searching. Mapquest I don't use, but it's like a yahoo/google thing. People have their preference and they stick with it. I think those are two valuable assets they have, and they just added a third. Financially they're paying for prior bad decisions, but they're improving that situation now I think.

 

And who knows if 350 million is overpaying. How could you know? Do you know what the ad revenue she was generating? Clearly enough to sell her one-time small blog for that much.

Mapquest I don't use, but it's like a yahoo/google thing. People have their preference and they stick with it.

Apparently, internet people in the know have been somewhat abuzz over Mapquest's Open Street Map, wikipedia style map system.

clearly huffpo, for all it's SEO garbage, is the best revenue model as of yet. And it is the heart of AOLs new strategy

 

I use moviephone all the time for my movie time searching. Mapquest I don't use, but it's like a yahoo/google thing. People have their preference and they stick with it. I think those are two valuable assets they have, and they just added a third. Financially they're paying for prior bad decisions, but they're improving that situation now I think.

 

And who knows if 350 million is overpaying. How could you know? Do you know what the ad revenue she was generating? Clearly enough to sell her one-time small blog for that much.

 

I said I didn't know what HuffPo was generating, but my guess is AOL still way overpaid, as they have a history of doing so...besides, anytime you buy out a company, you overpay for it, it's called the premium...how much of a premium is the question...and we'll know in the weeks to come.

I think it's a risk you take for AOL's vision. I think it's funny that one of the reasons people pointed to for the collapse of the news business was massive consolidation of ownership to a few huge companies, and before the online news business is even really getting going the same thing is happening.

I think it's a risk you take for AOL's vision. I think it's funny that one of the reasons people pointed to for the collapse of the news business was massive consolidation of ownership to a few huge companies, and before the online news business is even really getting going the same thing is happening.

I think there's also this belief permeating the internet that one big reason why the quality and depth of reporting has declined is duplication of services. You really only need 1-2 reporter making $2 million a year to sit in the room, ask Gibbs creative questions, and transcribe his answers, but instead you get the 20-30 person game every day. If a major news story happens, suddenly 6 major networks are all shipping large staffs and their entire workforce overseas, or to that convention/speech.

$300 million is nothing.

$300 million is nothing.

Maybe for a Republican...i could use it though.

OK, that was funny Balta

 

My parents were exactly who AOL was bilking every month. They were convonced they needed AOL's customer service even though they were paying for broadband service from Comcast. That is until I had them call AOL and ask about their internet connection.