At first, the amount of money AOL paid for HuffPo sounded insane to me but I guess it’s not:
The $315 million that AOL is paying for the Huffington Post is roughly 3X the valuation seen at its last capital raise two years ago, is 10X its 2010 revenues and is roughly 5X estimated forward 2011 revenues. Those are all big numbers, but not insanely so, for what is clearly a big strategic move on the part of AOL. After all, AOL has a market cap of $2.3 billion: right now it still dwarfs HuffPo. That might not be true in a few years’ time, if HuffPo continues growing at its current rate and AOL continues to lose subscribers and revenues.
My feeling, then, is that this deal is a good one for both sides. AOL gets something it desperately needs: a voice and a clear editorial vision. It’s smart, and bold, to put Arianna in charge of all AOL’s editorial content, since she is one of the precious few people who has managed to create a mass-market general-interest online publication which isn’t bland and which has an instantly identifiable personality. That’s a rare skill and one which AOL desperately needs to apply to its broad yet inchoate suite of websites.
I’m not a fan of Huffington Post but it’s amazing how successful it has been.
Elizabelle
I don’t read the thing. Too messy an interface, and often too hysterical.
Uloborus
Interesting. So whether or not she’s a shitty liberal, she’s a good carnival barker? If it’s a business and not political decision, that makes sense.
cervantes
Will they still promote magical mystical mumbo jumbo, blame vaccines for autism, and tell people not to get cancer treatment because coffee enemas work much better? Or is all that shit too out there for a publicly traded corporation?
Steve M.
It strikes me that it’s all about cred — about quieting the voices that say “BWAHAHAHAHA! AOL!” every time the company wants people to read its content. Best way to do that is to buy a site huge numbers of people already read.
Jim C.
So, basically the Huff Post people are being handed $135M to keep doing what they’ve been doing with Arianna calling the shots as she has been?
Wow. Good work if you can get it.
Elizabelle
Jane Harman, Democrat of California, is resigning from the House.
What?
http://www.nytimes.com/aponline/2011/02/07/us/AP-US-Congress-Harman-Resignation.html?_r=1&ref=us
mistermix
Disagree with Felix.
10x revenue makes sense if you’re banking on big growth and/or a business model can be exploited with more capital and/or the place is run by a genius.
Where’s that growth coming from? HuffPo is a mature site – they’re not adding readers at any kind of serious clip, AFAIK.
As for business model, it’s just “put ads on our site”. What’e great about that?
As for genius – c’mon. Even if she is a genius, which she’s not, I have to believe that she’s out as soon as her contract runs out. She’ll have an excuse, I’m sure, but in the end she has no real interest in turning around D-level properties like MapQuest and Moviephone.
Pococurante
All those spam emails promising I can make a decent living working out of my house? Worked for Arianna…
cleek
@Elizabelle:
my scandalsense is all a-tingle
mistermix
@Steve M.: I agree with this. They paid a high valuation in hopes of “synergy”, which never happens. The 1+1 = 11 quote is just another way to say “synergy”.
Elizabelle
http://www.latimes.com/news/politics/la-pn-jane-harman-congress-20110207,0,2276609.story
Sentient Puddle
Yeah, but is it really reasonable to guess that HuffPo will (or even can) grow at its current rate? That strikes me as being a really risky bet to take.
Just Some Fuckhead
Prolly will just wind up being a staid conservative takeover of an outlet that actually pushed liberal content.
DougJ®
@Steve M.:
That could be about right.
BGinCHI
Countdown till Howard Fineman starts reporting on himself.
Scott P.
Somebody said that AOL buying Huffington post will turn out like Time-Warner buying AOL.
Elizabelle
@cleek:
I know. I was wondering if it was health issues for herself or her husband. He’s 92.
And just bought Newsweek last year. For a dollar.
Zarathustra
The numbers look reasonable. If you are to look for insane valuation, that’s facebook.
Also sprach Analyst
NobodySpecial
Arianna mostly became successful at this because she had celebrity connections to help her at startup. Plus, I refuse to call her a lefty…all she is is a huckster who’s figured that there’s more free cash to be found on the left side of the aisle since Faux and Rush have tied up so much of the right.
Alex S.
@Jim C.:
Yeah, I don’t know what HuffPost is getting out of this, apart from the money.
Zifnab
For a lot of people, it’s the only game in town. Say what you will about Huffington’s liberalism, but she’s managed to position herself as the “liberal Rush Limbaugh” with quite a bit of success.
In an age where conservative voices are smeared across the entire spectrum of discourse, Arianna has placed herself among the handful of voices supporting a progressive view. I’m not surprised in the least that HuffPo has ballooned in popularity. Not when your other comparable options like Time, Newsweek, and USA Today have a more conservative bent.
Observer
Paying 10X revenue for a tech company is generally a bad deal for the buyer. Way about industry norms.
The fact that Felix Salmon needs to talk about future revenues to make it sound like AOL is paying 5X is telling.
Good for Ms Huffington, almost 90% probability bad for AOL.
Probably bad for HuffPo readers too, but time will tell.
Ahasuerus
@Elizabelle: You beat me to it; I was going to suggest health issues. But if that were the case you would expect the new job to be much closer to home than the old job. ‘Tis a puzzlement.
Karmakin
@mistermix: I’m usually a cynic on these things, but to be honest I think a 10x revenue/price (And I’m assuming that their costs are relatively low) is actually a good investment in this day and age, where AFAIK the revenue/price or profit/price (depending on how you want to look at it, I honestly prefer the latter) ratios are usually MUCH worse.
MaximusNYC
As mediocre as HuffPo’s content is, it’s probably an order of magnitude better than most of what AOL is currently cranking out.
My sense is that AOL’s recent content-centric strategy has failed to get traction mostly because the company is run by an ad-sales guy, who doesn’t actually know how to create decent content.
He’s trying to buy the expertise he lacks. This merged entity still has zero appeal to me, but never underestimate the market for mediocrity.
Culture of Truth
I remember when Arianna said she was starting a web site. I scoffed and I was wrong. About it’s undeniable success, anyway.
jsfox
A question that isn’t being asked. With a purchase price of $350 million does this blow up the model of HuffPo not paying for content. Do the bloggers who post their now for free in exchange for exposure suddenly go WTF!
arguingwithsignposts
You might want to check out the comments on Huffington’s “look at me” blog post about the merger. The “base” is *not* happy, and if the base isn’t happy, I don’t know where all that traffic is going to come from.
A web site – even BJ – is only as strong from an advertising perspective as its user engagement. If this merger drives away the thousands of commenters, it will be a bad one. I don’t know that Salmon gets that.
/dev/null
My biggest issue with HuffPo is its continuing support of junk science like homeopathy in their health section.
edit: which has little to do with the subject at hand. just annoys me every time I think of it.
Amanda in the South Bay
It seems like a bunch of business mumbo jumbo to justify a ridiculously large amount of money to be paid for a pile of steaming shit.
BGinCHI
@arguingwithsignposts: I thought this site was strong because of Tunch.
Face
OT:
Why do I sense this is Lucy holding the football, begging Chuck to kick it?
Southern Beale
Apparently Arianna is going to be in charge of all AOL’s editorial content now? Something like that? Wingnut headzapoppin’ methinks.
I wish she’d funnel some of that $315 million into supporting some kind of liberal talk radio … one station, in one market that’s not San Francisco or New York City, just one. C’mon, try Nashville, we’re a liberal city in a Red State. Give us a big signal. Not everyone goes online, we gotta reach people somehow. There is NO liberal talk across vast reaches of America unless you subscribe to Sirius/XM.
sukabi
great deal for Arianna… since most of her “writers” are unpaid and that probably won’t change under the new deal… look for writers to start jumping ship… it’s one thing to work for free for a relatively small company that’s just “getting it’s legs” and you can align with politically… but to do the same for a multi-billion dollar company… don’t see that happening.
at any rate, over the last 2 years the HuffPost has gotten more and more unreadable — unless you like sensational headlines that are divorced from the anemic stories they’re linked to… oh and celebrity gossip.
mistermix
@Karmakin: Cite a few comps if you think 10X is a good deal.
But, let’s say for the sake of argument that it is a good deal. If the HuffPo acquisition is such an awesome deal that it was going to turn AOL’s media story around, why was it a 95% cash deal? Why didn’t Arianna and her investors want to get a piece of that sweet, sweet AOL pie – even a modest 20%? The reason is obvious – it’s a shitty deal for AOL and it won’t do a damn thing to turn that place around.
Loneoak
The obvious problem is that anyone with an AOL email address likely thinks Obama is Malcolm X’s illegitimate son, born simultaneously in Canada and Kenya, which really are the same place anyway when you think about it.
Jager
@Zifnab:
A geek pal of mine said the links are the reason the traffic is so high on Huff Po. Its a site people go to, to go somewhere else. They return and repeat the process. The value is set by the traffic. Can they drive more traffic, who knows?
BGinCHI
The headline on this story really ought to be:
AOL Buys Online Media Site Where Almost Everyone Works For Free
(Wall St gets wood every time they hear about such sweet exploitation)
sukabi
@Amanda in the South Bay: unless the AOL management / culture has changed over the last couple of years this is what they do… pay huge amounts of $$$ for steaming piles…. or pay huge $$$ and turn that investment into a huge steaming pile … think AOL – Time/Warner merger…
aimai
@Sentient Puddle:
I agree with Sentient Puddle, the notion that a media organization like HuffPo can keep growing exponentially when they neither own any new technology nor make much new content is absurd.
However, it is a remarkable achievement. Just befor the 2008 election I was giving a lecture on the internet to a bunch of senior citizens who were avid but untutored users. Two older guys, life long conservatives, approached me to talk politics afterwards and both of them were starting to list democratic *as a result of reading HuffPo*. I was really surprised because to me it still seemed a sort of out of the way place to go for information. But they were turning to it.
aimai
Zifnab
@Jager:
Sounds like Google. :-p They’ve done fairly well.
Sly
@/dev/null:
HuffPo’s penchant for diluting something until its worthless is applicable to more than just its health section.
Loneoak
@/dev/null:
Agreed. But it is based in LA, where former porn stars know more about health than doctors.
Maude
@sukabi:
The word vapid comes to mind. The pretense that it’s not a junk site is silly. I haven’t read it in years.
Ana Gama
About the only decent content at Huff Post is written by Sam Stein and Ryan Grim. Otherwise…pffft.
/dev/null
@Sly, @Loneoak.
+1 each.
Malron
Huffington Post, the great internet empire that brought us the immortal Mayhill (rednecks cling to their guns and religion) Fowler. My guess is FluffPost will lurch even further to the right now that AOL is bankrolling them.
And, uh, meh on this bullshit:
cough cough(Drudge Report)cough
Incidentally, exactly what have rednecks/Tea Partiers/right wing religious whackjobs/conservatives been doing since Obama was elected?
Clinging to their guns and their religion.
BGinCHI
@Ana Gama: Jason Linkins too.
sukabi
@Maude: what’s so telling about “our betters” in DC is that the supposed Democrats go to the HuffPost for their “news” and the Repubs go to Drudge… WTF is up with that??? leaves me to believe that there are NO functioning brains among them.
retr2327
“AOL Buys Online Media Site Where Almost Everyone Works For Free” & by and large, you get what you pay for.
Count me among the skeptics. It’s 90% a waste of time and space (and yes, they’re still giving space to Jenny McCarthy to spout horse__t about autism even after the Brits found evidence of deliberate fraud in the critical study’s results). And the one thing I remember from my information theory course is that as the error rate approaches 50%, the value of the information approaches zero. That strikes me as more likely to prove true here than any 1 + 1 = 11 nonsense.
JGabriel
@BGinCHI: And Dan Froomkin.
.
arguingwithsignposts
@BGinCHI: It’s strong because of the Cult of Tunch.
Ailuridae
@BGinCHI:
They posts some decent statistically based sports stuff too.
BGinCHI
@arguingwithsignposts: The judges will accept that answer.
WyldPirate
@sukabi:
What? “sensational headlines”, unreadable bullshit gossip and the like are the favored reading material of real Amerikkans (TM). Just look at any grocery store checkout lane next time you buy groceries.
And Ariana Huffington? She’s been a grifter forever. A “liberal” version of Sarah Palin who thrived sniffing other people’s problems and commenting on them like someone that sniffs soiled underwear. I despise her worse than Sarah Palin.
Emerald
@NobodySpecial:
Bingo, although I think it’s more sinister. Yeah, she’s after the $$$, but I believe that Arianna always was and is now a Republican. She’s done nothing but tear down Obama from day one. She calls herself a liberal, puts some liberal commentary up there, and then uses that platform to chip away at the Democrats from the “inside,” as it were.
Never forget that Andrew Breitbart helped to design that site. She still vacations with Gingrich. She was with Darryl Issa in Vegas on the day of the Tucson shootings.
Bloody double agent.
WyldPirate
@Amanda in the South Bay:
Careful, now. You’re getting close to describing the entirity of American capitalism in the 21st century.
John Cole
I like Stein and Froomkin, but really, the HuffPo is just impossible to read.
And hell, let’s face it. The Superficial and Double Viking are better.
JGabriel
@WyldPirate:
How much of Arianna’s audience comes from the US? I suspect HuffPo gets a decent amount (not majority, but not negligible) of its traffic from the rest of the English speaking world (Canada, UK, Australia, New Zealand, India, Ireland, Belize, et.al.)
This may be one of those instances where it’s a little parochial to blame the frothy content mix of sensation, gossip, and bad health advice strictly on the “Amerikkans™”
.
KG
@Elizabelle: the line at the end about being able to do more from the outside than the inside reminded me a bit of Palin’s resignation speech. It’s not like we have competitive seats here in California, so it’s not going to change the make up of the House.
Dave
When I read “This is a case of 1+1=11,” all these alarm bells started sounding and red lights started blinking. The red lights spelled “TOM FRIEDMAN.”
Yutsano
If I just say I don’t bloody care does that make me a bad human?
Phil Perspective
@Scott P.: I thought AOL actually bought out Time Warner.
Judas Escargot
@Dave:
Well, you can’t say ‘synergize!’ with a straight face anymore. Maybe 1+1 is the best they could come up with.
catclub
@Maude: “The pretense that it’s not a junk site is silly. I haven’t read it in years.”
Or as Yogi Berra put it: Nobody goes there any more, it’s too crowded.
catclub
@John Cole: “The Superficial and Double Viking are better. ”
Those sound like ‘a Brazilian.’
Are they related?
WyldPirate
@JGabriel:
Can’t argue with this. I didn’t really intend to imply that Amerikkkans(TM) were the sole “consumers” of HuffPo’s particularly noxious brand of horseshit.
There are plenty of people the world over who love to gawk at the misfortunes of others and revel in reading celebrity-related news. HuffPo found a niche and filled it.
The Dangerman
Go with your gut; it’s insane. Reminds me of that card company (Blue Mountain Arts?) that was sold for 800 gazillion back in the day. It’s a joke.
giltay
I suspect the people who write “user-generated content” of any quality will abandon ship. (I don’t know if there is any; I don’t read HuffPo.) AOL is a big enough company to make it to the “MAKE IT RAIN, BITCHES” endpoint of the Should I Work for Free Flowchart.
So, you’re left with the people who write to get exposure, i.e. the slush pile.
Ed in NJ
As someone who has kept an AOL email address for years even after it went free (mostly for family members and to use as a spam folder), I am subjected to the content they push towards their members. It’s a bunch of gossip and dumbed-down conservative talking points aimed at the old users who were too stupid to get off AOL.
So I see this as a good thing in Huffington is going to start controlling the editorial content at AOL. It can’t be any worse than the crap that’s on there now. I would bet that conservatives are up in arms over this.
Pongo
I can’t even read Huffpo any more, with their pseudo-science, homeopathy, anti-vaccine BS. Oprah and Arianna have done more to set back medical science in the past decade than any number of corrupt pharma companies. They can proudly claim at least partial responsibility for the deadly, totally preventable, whooping cough and measles outbreaks we’ve been subjected to by perpetuating the fraud of Andrew Wakefield and the ignorance of Jenny McCarthy. Providing a forum for idiocy and treating dangerous notions as falsely equivalent to biological facts makes them liable for the consequences–including the unnecessary deaths of innocent infants from diseases we had essentially eradicated decades ago.
I used to enjoy the political coverage of the Huffpo, but eventually had to wonder if their political coverage was as shoddy and fact-free as their medical stuff is. IMO, there are far better options for political analysis on the left (TPM, 538 and Balloon Juice, for example) that don’t require suspension of the activity of the little grey cells to be believed.
Did I mention that I’m not a fan?
zonk3
I responded to this critically, though tactfully, as it broke on HuffPost and all but one of my comments were deleted by moderators. Fuck ’em. They sold out when they brought on that guy who hated bloggers, Howie Fineman.
Brachiator
It’s like a rescue boat hitting another iceberg after picking up survivors. AOL was going down the tubes, and the HuffPo pretends to be journalism, an alternative to journalism, or something. Arianna Huffington now takes control over AOL editorial products, applying her vast lack of journalism experience to manage something.
Oh, well. This is just as creaky as Rupert Murdoch’s iPad Daily, a honking pile of flaming manure.
Amanda in the South Bay
I also feel like Felix Salmon…knows some things very well (the economy) but in other fields…he’s either totally naive, totally out of his depth, or some combo.
Judas Escargot
@Ed in NJ:
So I see this as a good thing in Huffington is going to start controlling the editorial content at AOL. It can’t be any worse than the crap that’s on there now. I would bet that conservatives are up in arms over this.
I didn’t think of this angle at all.
That said… are hoardes of stupid, uninformed liberals guaranteed to be less damaging than the hoardes of stupid, uninformed conservatives AOL has now?
If the answer is ‘yes’ then they should buy yahoo’s discussion boards while they’re at it.
EDIT: double negatives. Benna-Drill (FYWP). Bad mix.
Pangloss
Celebrity news is a cash cow.
matt
Where’s the slide show where I can rank what I think of this sale?
liberal
@Observer:
Heh. Now what merger from the past does that remind you of, with the tables turned?
Jennyjinx
I haven’t read all the comments, so excuse me if this was already asked.
Why is it surprising? She had capital to create the site and her connections brought her a lot media attention straight out of the gate. She had a head start before she even went live. Even after she was busted for impersonating George Clooney (by cutting and pasting his offsite quote to create a “blog post” onto which she put his byline without his permission) she was still able to maintain some kind of “authority” as the voice of the left. She pays almost nothing (if anything) to contributors, has been busted scraping Twitter for content, and is notorious for her use of sensational headlines just to grab attention.
Shoot, I’d have been more surprised if she wouldn’t have been able to make a good profit off of it.
Meh.
catclub
@Brachiator: “This is just as creaky as Rupert Murdoch’s iPad Daily, a honking pile of flaming manure. ”
Don’t most of Murdoch’s large ventures make money? Or is the honking pile of manure description no bar to also making honking piles of cash.
Note I said large ventures. I know there are various small ones that are pure vanity. Kind of like all the small unprofitable pieces of Microsoft that are paid for by Windows and Office.
liberal
@catclub:
I thought many of them don’t, but could be wrong about that.
agrippa
I do not much care for A H. I have doubts about how ‘liberal’ she liberal she is. And, I do not much care for her sniping at Obama. HuffPo is not a good source for news and analysis.
frankdawg
If that lame shit hole is worth $315M there must be porn sites worth $315Trillion. Really $315 for Jenny McCarthy, watered down “People” occasional intelligent commentary.
It is a sick, sad, world.
sukabi
@frankdawg: but it’s THE place to go to read about the latest “celebrity” fart, yawn, or belch…
yeah, it’s pretty worthless.
CaliCat
I think Arianna Huffington is the biggest con artist in media history. And she just pulled off the biggest swindle in the history of liberal America. AH, Breitbart and Newt are laughing their asses off right now.
maus
God, I hope the whole AOL empire collapses upon itself,taking HuffPo and Huffington herself with it.
I loathe insincere faux-Liberals so very much. She’s like the fratboys who lie about politics to get laid, only she wants to get into the right parties and have adoration laid upon her. She’s a sleazy opportunist, as evidenced by her granting paid columns to dangerous anti-vaxers and other pseudoscientists.
Janus Daniels
Yes, HP posts crap; I don’t read that. HP provides a centrist news and opinion dump in the middle of overwhelmingly right wing media. You can easily find good articles by people who wrote something insufficiently Republican to get published elsewhere. They think, “I wrote it, corporate won’t print it, much less pay me, it’s topical, it’s value can only decline with time, stick it on PuffHo,” and done. However much it may suck, it’s their best move. It’s a better move than they or we had before 2005. HP performs a service for them and us. (AOL overpaid, but the last time AOL did anything smart was… TimeWarner? and they fumbled it.)