When AOL bought the Huffington Post, I typed notes and fielded a call from reporter @rfaughnder and never got to writing my own thoughts. Yesterday,. a good part of the discussion in a Social Media Week panel on valuation was about how AOL overpaid, on a purely financial basis (though we all know they were really buying whatever "ooomph" Arianna & Co. give it, not just a multiple of cash flow or revenues; think of what it's worth in PR terms if under Huffington's name it says "AOL" every time she's on ABC, NBC, CBS and all the rest. Not to mention her acumen and her staff's expertise.)
On the panel, Mark Patricof of MESA Global media advisors (and son of media-tech investor Alan Patricof) said HuffPo likely would have found it hard to reach $100 million (which I took to mean yearly revenues), the amount it would have taken to have a very successful IPO. So for them, it was a good deal.
Here's my bullet point list.
- It shows AOL is now a content company -- especially, for now, written content -- not ISP or services
- AOL gets HuffPo editorial acumen -- ability to aggregate as well as create
- HuffPo gets resources (tech, business) and cash
- But don’t ignore HuffPo technical acumen - content management and SEO,
- Good value on financial basis? (For HuffPo, certainly. Good valuation, keep brand, keep leadership.)
- Is this a good strategic fit?
- Can cultures work together?
- Arianna's politics an issue? (AOL won’t want to tick off conservatives.()
- HuffPo was looking to do more local. Patch helps?
- In line w/ AOL's plans and leaked document (referred to in piece linked below).
- Another step in the new world of journalism and content creation.
And here are excerpts from Ryan Faughnder's piece in the Annenberg publication Neon Tommy: Huffington Post Deal Dovetails With AOL's Strategy
The changes are strategically in line with what AOL is trying to do already,” said Dorian Benkoil, senior vice president and editorial director of Teeming Media, a consultancy company for digital media organizations.
AOL will try to tap into The Huffington Post’s technical mastery of search engine optimization and content management, he said.
“They have created a successful modern media company based on aggregation, optimization and creation, as well as a very important social layer and the ability to link and monetize those links. I think that model is repeatable across the board,” he said.
According to a copy of AOL’s master plan, acquired by Business Insider, Armstrong wants AOL to “increase its story output from 33,000 to 55,000 per month, page-views from 1,500 to 7,000 and web optimization of stories to 95 percent. Stories are heavily vetted for their potential to draw advertising.
The Huffington Post will clearly benefit from the deal, Benkoil said.
“They get to continue to do what they do and preserve what they have while using the resources of AOL,” he said."