AOL Takes A Sharp Left Turn To Prevent Being Left Out?

AOL’s promise to be a premiere content company is apparently being fulfilled by how willing they are to spend money for established content providers much more than creating that content itself.

The latest example of this desire to pick up major properties in the blog space (like the recent TechCrunch deal) is the purchase of The Huffington Post for $315 million (mostly in cash according to Kara Swisher of the WSJ’s BoomTown blog). What makes this purchase interesting aside from the marquee nature off HuffPo is the assignment of Arianna Huffington as the President and Editor in Chief of AOL’s newly formed The Huffington Post Media Group.

To this point in time AOL has been somewhat of a middle of the road (politically) content generator in general. They are not afraid of controversy (heck, anyone who pays to bring Michael Arrington into the fold has to embrace controversy) but now AOL could be developing what all big media entities are often accused of and praised for in the same breath: bias.

There is no denying what the Huffington Post is. It’s a liberal blog / media outlet. Nothing wrong with that, it just is. And the obvious political leanings of Ms. Huffington are what made her famous (which she adopted following a stint as a conservative commentator). As we approach what is likely to be a rather contentious political time leading up to the presidential elections in the US in 2012, it looks like the new AOL is taking a stance. Of course, with the two largest online outlets for the left, CNN and MSNBC, falling quite a bit in the recent past, maybe AOL’s seeing the chance to fill the void and try to take on the right’s flagship, Fox News (Oh sorry Fox, I forgot you are fair and balanced. Please…..).

So now it looks like AOL’s content play to get back in the game is coming together but not how it was originally envisioned. Seed, AOL’s own corporate run content farm effort, has not been what was promised and Patch has been a $30 million a quarter loser despite aggressive attempts to bring that vision to life.

However, the wonderful wizard of AOL, Tim Armstrong, is banking on the scale of Huffington to bring Patch and AOL’s hyperlocal efforts along for the ride. That one is far fetched, in my opinion. The readers of HuffPo who are looking for biting commentary from the likes of Bill Maher and Al Franken aren’t exactly the rural Americans that care if Mrs. Smith’s cow got out of her pen yesterday.

If you like internal corporate memos around big change like this here is the one from Armstrong to the AOL team. The funny thing is that this comes courtesy of AOL’s content producing black sheep, TechCrunch, who claim they didn’t even get the memo!

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.

Here’s a special message for all of you we taped to welcome The Huffington Post and Arianna to our AOL Family:

http://today.office.aol.com/company-news/2011/02/aol-agrees-buy-huffington-post

And of course we wanted to welcome Arianna to our “You’ve Got” video of the day—check her out on AOL.com.

We will be holding a company all hands meeting to address your questions related to today’s exciting news. We will video conference from our New York office on the 6th Floor at 9:30 AM ET and will be joined by Arianna Huffington and key executives from her organization. We will also be holding a call for our west coast offices at 2:00 PM ET and for our Patch offices at 2:45 PM ET. See below for meeting info (conference rooms will be sent out shortly).

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

What I can’t wait for is the first Michael Arrington v. Arianna Huffington dust up.

What’s your take on this move? Is it the content check mate that puts AOL at the top of the heap or the latest in a line of ‘save my job and legacy’ moves by AOL CEO Tim Armstrong?

  • http://wyblog.us/ Chris Wysocki

    Well, now we know where Keith Olbermann’s next paycheck is going to come from.

    • http://www.frankthinking.com Frank Reed

      @Chris – hadn’t given that a thought but I suspect you are correct on that one!

  • PC

    The HuffPost is a bloated tabloid in search of a bigger high, stronger buzz. The Charlie Sheen of journalism. Arianna Huffington- the social media porn star.

  • http://www.arcanasphere.com/ AndrewJ

    My curiosity and personal bias are getting to me here. The big picture in marketing is somewhat contradictory to me.

    This is AOL, a corporate entity that is constantly seeking stability. How can reaching out to an audience who believes that large corporate entities are evil possibly be a good long-term marketing strategy for AOL – a company with a third of a billion dollars to spend in acquisitions?

    • http://www.frankthinking.com Frank Reed

      @AndrewJ – Good point and one I really hadn’t considered. It is a bit interesting how diametrically opposed entities can suddenly be one. Could it be that the HuffPo was just more about making money and becoming like the companies it railed against? No matter how you shake it it does come off as a bit disingenuous unless of course you look at from the capitalist POV.

      Is this HuffPo saying, do as I say not as I do maybe? Pretty funny.

      • http://www.arcanasphere.com/ AndrewJ

        Exactly. How is this good for either the liberal perspective that people do not need such amounts of money to live happily? How does this apply to the capitalist mindset of AOL’s long term marketing goals? How can preaching their own supposedly wretched existence count as a “comeback”?

        How can any company or industry survive this? Record companies spent decades marketing their anti-corporate acts. Now they wonder why “corporate rock” is despised and why their industry is failing. Other factors are surely involved, but it does seem that they shot themselves in the foot, leg, and kneecap on that issue.

        Yes, I have strong capitalist leanings. I still wish for everyone to know personal joy and success. Something just tells me that this approach to such fulfillment is both temporary and self-destructive. THAT is the matter that confuses and saddens me.

  • http://www.arcanasphere.com/ AndrewJ

    I need to amend my thoughts upon learning that Huffington did not pay most of her artists or writers. She made a hundred million dollars personally off of the hard work of others, under the banner of “anti-corporate” ethics.

    I am likely to destroy the few remaining ties I have with AOL as a consumer. That is thoroughly disgusting, and all involved parties should be shamed out of business.