AOL has bought Huffington Post, the online news aggregation and comment portal, for $315 million, it was announced over the weekend. It’s the latest big money buy-out from AOL since it spent something like 25 million on Techcrunch.
The excellent Kara Swisher interviewed AOL CEO Tim Armstrong and eponymous Huffington Post founder Ariana at the Super Bowl in Dallas yesterday – watch it here, courtesy of AllThingsD
AOL is still looking for the long-term turnaround it needs following its de-merger from Time Warner, one of the most ill-fated tie-ups in recent times. Now on a mission to build a digital content empire in different verticals, interests and industries, AOL is betting the farm and the cows on ad-funded online content.
The only problem with that is that ad revenue is going south. In Q410 ad revenue fell 23 percent to $247.5 million year on year; AOL’s third-party network advertising on other sites dropped by 43 percent; search and contextual ad revenue (from which Google makes its fortunes) fell by 34 percent.
The press release on this deal makes a big point of saying the new combined online properties will reach more than 200 million people globally. But sales of online display advertising in international markets fell 53 percent. Profits did rise in the quarter, to be fair (MarketWatch has more).
But this deal is more than an acquisition and for once the term “strategic acquisition” doesn’t sound out of place; this isn’t (just) about revenue it’s about creating a new content unit. Ariana will be editor-in-chief of the Huffington Post Media Group, which includes Engadget, TechCrunch, Moviefone, MapQuest, Black Voices, PopEater, AOL Music, AOL Latino, AutoBlog, Patch, StyleList…. and more.
She’s proven it’s possible to eke out a business model from engaged users, big traffic, aggregation and strident comment – and now Armstrong wants her to do the same for AOL’s other properties.
As an entrepreneur friend of mine once put it: when someone is bought out by a bigger player in the online space, it’s not so much “congratulations” but “good luck”.