AOL Buys Another Company, Huffington Post, for $315 Million - The UpStream

AOL Buys Another Company, Huffington Post, for $315 Million

posted Friday Feb 18, 2011 by Nicholas DiMeo

AOL Buys Another Company, Huffington Post, for $315 Million

I'm not quite sure where AOL is getting the money to purchase all the companies that they are frightened by but they are sure doing a good job at creating a huge cluster of big brands underneath their umbrella. With TechCrunch, Engadget, Joystiq, Moviefone, Mapquest and Switched already under their belt, AOL has now purchased Huffington Post for $315 million, $300 million of it in cash. Co-founder Arianna Huffington will become president and editor-in-chief. Since its inception in 2005, the HuffPo has been ever-growing in popularity and now reaches an average of 25 million visitors and over 4 million comments each month. AOL and Huffington Post's board of directors have agreed on the transaction as have the shareholders and the finalization of the deal should happen no later than early Q2.

From AOL and Huffington Post we have a press release:

Acquisition Will Solidify AOL's Strategy of Creating a Premier Content Network With Local, National and International Reach

Arianna Huffington To Lead Newly Formed The Huffington Post Media Group Which Will Integrate All Huffington Post and AOL Content, Including News, Tech, Women, Local, Multicultural, Entertainment, Video, Community, and More

The New Combined Media Group Will Reach 117 Million Americans and 270 Million Globally

Group Uniquely Positioned To Redefine the Future of Brand Advertising and Marketing For an Engaged and Influential Audience

Tim Armstrong, Chairman and CEO of AOL spoke highly of the acquisition and of Arianna Huffington.

The acquisition of The Huffington Post will create a next-generation American media company with global reach that combines content, community, and social experiences for consumers. Together, our companies will embrace the digital future and become a digital destination that delivers unmatched experiences for both consumers and advertisers. ... Arianna is a singularly passionate and dedicated champion of innovative journalistic engagement, and a master of the art of using new media to illuminate, entertain and enhance the national conversation. Arianna is a remarkable person and she will continue to create remarkable outcomes for the combined company.

For more on this move, follow the break.

What's interesting about this move is that Arianna Huffington will also be in charge of all AOL and partner content, including the stuff on Engadget and TechCrunch. This will allow every article to be incorporated into the Huffington Post's page and will really bring more variety, original content and, more importantly, visitors to the site.

AOL's CEO Tim Armstrong really wants to start pushing AOL back into the faces of Internet users, as recently the AOL brand has really taken a backseat when people think of places to go for pertinent information and things to do. AOL at this point needs to focus on advertising and getting more exposure, and a site like the Huffington Post is a perfect way to do it. Advertisers are going to be more interested in AOL as they now have a site that is very good at getting and maintaining user interactivity on their pages.

This isn't a surprising move for HuffPo, though. Rumors were flying around that Yahoo or NBC may have purchased the company and they would've sold to a larger company anyway.

For the employees, almost all of the 200 employees will be making the move over to AOL, with only Chief Revenue Officer Greg Coleman taking a severance package and leaving the company.

We also got ahold of an internal memo from Armstrong himself.

AOLers,

We are taking another major step in the comeback of AOL. Today we are announcing that we have agreed to acquire The Huffington Post, one of the most exciting, influential, and fastest growing properties on the Internet. We believe in brands, quality journalism, and the positive role of communities in the world–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.

Co-founded six years ago by Arianna Huffington and Ken Lerer, The Huffington Post has grown to become an industry leader–one of the Web’s most popular and innovative sources of online news, commentary, and information. Arianna and team have created a brand and a destination that focuses on the consumer experience. By combining The Huffington Post with AOL’s network of sites, thriving video offerings, local expertise and enormous reach, we will create a company that is laser-focused on serving our audiences across every platform imaginable–social, local, video, mobile and tablet.

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 Huffington Post is a strong influencer brand and it attracts a valuable audience, including a great focus on women’s content. In addition, Arianna Huffington is a world-renowned expert on women’s topics and issues, and has enabled The Huffington Post to grow rapidly by continually developing new audiences.

In the local area, the combination of the two companies will create a scaled connection between global and local communities on one platform. This will create a new way for people to get local and global information in a timely and entertaining way.

The Huffington Post will join the family of AOL Brands that are destinations for an influencer audience, brands like TechCrunch, Engadget, AutoBlog, and Moviefone. Uniquely, The Huffington Post is the platform for influential people–the people that drive trends, commerce, politics, entertainment, news, and information. Adding this strategic platform to our already strong network of sites, including the AOL homepage, has the potential to make AOL the most influential company in the content space.

Arianna Huffington is one of the most successful entrepreneurs in the Internet space and someone that is even more successful in building communities and relationships in every corner of the globe. The Huffington Post and Arianna have created a company that has partnered with the most successful and well-known leaders in all aspects of society that touch important topics to give consumers direct access to the most influential decision makers and community leaders.

This acquisition will create a high-quality and diverse digital ecosystem encompassing local, national and international news, politics, entertainment, technology, fashion, sports, health, personal finance, green, lifestyle, the arts and more. This deal will combine the amazing talent at AOL with the innovative and talented staff of The Huffington Post. Here are just a few high-level points around what this deal brings to market:

* Together, AOL and The Huffington Post will have 117MM unduplicated domestic monthly UVs, and ~270MM monthly UVs worldwide (according to comScore Dec 2010).

* The Huffington Post is one of the fastest growing web properties on the Internet. It grew 22% last year–that’s faster than Twitter, which grew 18% – and 15x as quickly as the Internet grew last year (comScore Dec ’09-’10).

* Both AOL and The Huffington Post count powerful, affluent users among their top loyal visitors, significantly over-indexing in $100K+ income users.

* AOL passed Hulu in unique viewers on video in the fourth quarter of 2010; video views on AOL are up 400 percent year-over-year.

* Between AOL’s innovative Project Devil ad unit, engaging users for 27 seconds longer than traditional display ads, and The Huffington Post’s highly-vocal community, with 4MM+ comments per month, we will marry attention-grabbing content and brand experiences for both advertisers and consumers.

In the local area, the combination of the two companies will create a premier global/local syndication network at scale. This will create a new way for people to get local and global information in a timely, informative and entertaining way.

To maximize the strategic advantage of this great deal, we will be creating a new group at AOL called The Huffington Post Media Group. Within this group will be AOL Media, AOL Local & Mapping, AOL Search and our new friends at The Huffington Post. We will continue operating the towns structure, AOL.com and HuffingtonPost.com.

I’m thrilled to announce that Arianna Huffington will join AOL’s executive team as President and Editor in Chief of The Huffington Post Media Group. We have asked Jon Brod to lead the overall operational integration on the AOL side of the combined entities. Jon will lead the local group integration and work closely with David Eun and the teams in AOL Media. We will work quickly with The Huffington Post to create a combined organizational design to coincide with the deal closing. While we wait for the required regulatory reviews to be completed and the transaction to close before implementing the design, we will move very quickly to plan the details of the integration of the two companies. To this end, we will announce the new organizational structure as soon as possible.

In the meantime, we will continue creating great content and products for our consumers within the town structure and stay laser-focused on the aggressive goals we have set for our winter luge. We are on the right track and will continue our weekly operating cadence and town structure to drive successful results against our company goals.

...

AOL is playing to win…and The Huffington Post and AOL will occupy a unique place in the future of the Internet. Let’s go get it done.

–TA

I'm very interested to see how this is all going to play out and to see if AOL is actually going to use the acquisition to their advantage. They could go the other route, choose not to innovate or improve for a while and end up playing catch up. It does seem, however, that AOL is trying to make a comeback. Does anybody really even go to AOL's main site anymore? Did you even know huge names like Engadget were under the shade of the AOL tree? We want to know in the comments!

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