Shahid Khan comments on AOL-Huffington Post deal in Bloomberg article
AOL to Buy Huffington Post for $315 Million; Founder Keeps Role
By Brett Pulley and Young-Sam Cho - Feb 7, 2011
AOL Inc. agreed to buy the Huffington Post for $315 million as the Internet company spun off from Time Warner Inc. increases its investments in online content to help revive growth in advertising revenue.
The offer includes about $300 million in cash and the deal will likely be completed late in the first quarter or early in the second, New York-based AOL said in a statement today. Co- founder Arianna Huffington will become president and editor-in- chief of the Huffington Post Media Group, which will include all Huffington Post and AOL content.
AOL, led by Chief Executive Officer Tim Armstrong, acquired the TechCrunch blog and 5Min Media last year, investing in specialized websites and production of original video content to generate Internet traffic and attract advertising revenue. The number of unique visitors at closely held Huffington Post, which aggregates articles and publishes its own content, has grown to about 25 million a month since its debut in 2005.
“With this acquisition, Tim Armstrong is well on his way to transforming AOL into an online editorial-based content company,” Shahid Khan, chairman and chief strategist at MediaMorph Inc., a New York-based digital media-tracking service, said in an interview. “HuffPost gives AOL a very compelling, affluent, educated young audience. It further strengthens AOL’s overall editorial abilities with Arianna in charge.”
Huffington Post had revenue of about $30 million last year and has been aiming to triple that to $100 million in 2012, a person familiar with the company’s plans said in December. Khan said the purchase price is at the lower end of what he expected.
AOL this month reported fourth-quarter advertising sales dropped 29 percent to $331.6 million, while total revenue fell 26 percent to $596 million.
Huffington TechCrunch
The combination will create a group with about 270 million unique visitors a month worldwide and 117 million in the U.S., according to the statement. Huffington Post material will be integrated with AOL content, including Engadget, TechCrunch, Moviefone and MapQuest, according to the statement.
“Huffington Post brings another level of ability for us to serve brand marketers,” said Armstrong in a conference call. He said marketers contacted in recent hours are “very interested in this combination.”
Huffington, a Greek-born, Cambridge-educated author and political commentator, said in an interview in December the news site would post its first annual profit in 2010.
‘Moved Quickly’
AOL’s Armstrong requested a meeting with Arianna Huffington this year and made the offer to buy the website at a lunch at her place, according to a blog posting by Huffington today.
“Things moved quickly” and the deal was signed at the Super Bowl at the Cowboys Stadium in Arlington, Texas, yesterday, she said.
The site has benefited as newspapers and magazines lose readers and advertisers to the more interactive experience of Web services. While the site’s number of visitors trail behind those of the New York Times, it exceeds those of online-based rivals such as the Daily Beast and the Drudge Report, according to estimates at ComScore Inc.
To contact the reporters on this story: Brett Pulley in New York at bpulley@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net.
To contact the editor responsible for this story: Peter Elstrom in New York at pelstrom@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net
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