AOL hopes to be content with Huffington Post deal

AOL has grand plans to make the left-leaning news site its flagship content title. Could it be the answer to the ISP's prayers?

by Emma Haslett
Last Updated: 12 Mar 2012
Once king of the internet, AOL has spent much of the last decade trying to recover from its disastrous merger with Time Warner during the dotcom bubble. But now it’s hoping to recapture its former glories with a slightly smaller deal: to the surprise of pundits, it’s agreed to buy news site The Huffington Post, one of the biggest online success stories of the last few years, for $315m (£196m). That’s a hefty price tag, particularly given HuffPo (as it’s known to its friends) has only been around since 2005. But if it proves to be the solution to all AOL’s problems, it may prove cheap at twice the price…

HuffPo started life as a rag-tag collection of blogs aimed at Democrats, a sort of left-wing antithesis to the Drudge Report. Since then it’s grown into one of the largest news sites in the world, drawing in an average of 25m users a month. The plan for the merger is apparently to integrate AOL’s existing news content (of which there is a huge amount) with HuffPo as part of a new subsidiary called ‘The Huffington Post Media Group’, with founder Arianna Huffington at the helm (rejoicing in the grandiose title ‘president and editor-in-chief’).

Unfortunately, AOL doesn’t exactly have the most reliable track record when it comes to big deals. How can we forget that ill-fated $186bn tie-up with Time-Warner, which finally died a death in 2009? Since then, the company has been desperately trying to work out exactly what its purpose in life is.

But CEO Tim Amstrong, who joined the company in 2009, is a man with a plan. A leaked memo a while ago described the newly-instated ‘AOL Way’, which restructured the brand around content, focusing on creating lots of low-cost, search-engine-friendly articles. And having acquired three content-providing services (technology blog TechCrunch, video production company 5min Media and software-as-a-service company Thing Labs) in September, this deal shows how serious he is about that strategy. HuffPo is clearly intended to become the jewel in that content production crown.

Both sides have something the other wants. Armstrong once described AOL as having ‘off-the-charts brand awareness, and off-the-charts user-trust and loyalty, but almost no brand identity’. HuffPo can provide that, while at the same time using AOL's scale and reach to grow even faster. In fact, the two parties are so excited that they're describing the deal as ‘1+1 = 11’. But if you think that sounds a bit hubristic, you’re not alone. AOL co-founder Steve Case, who played a big role in that ill-fated Time Warner deal, tweeted today: ‘AOL to Buy Huffington Post; Tim Armstrong says "1 + 1 will equal 11" Really? That wasn't my experience.’ Can they prove him wrong?

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