AOL Buys Huffington Post: What the Media Is Saying About the Big Media Deal
AOL CEO Tim Armstrong says the deal "will create a next-generation American media company with global reach that combines content, community and social experiences for consumers." And HuffPo co-founder and guiding light Arianna Huffington puts it this way: "By combining HuffPost with AOL's network of sites, thriving video initiative, local focus, and international reach, we know we'll be creating a company that can have an enormous impact, reaching a global audience on every imaginable platform."
What's the rest of the media world saying about the biggest deal to hit the strictly digital content business in quite a while?
Opinions from media columnists have ranged from praise to pillory and everything in between. The Wall Street Journal's "Heard on the Street" column says AOL's purchase of HuffPo "should end more happily for the target company's investors" than the TimeWarner-AOL linkup, which is often cited as one of the worst mergers in recent history.
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CNET, which called the HuffPo announcement "shocking," says by its action, "AOL seems intent on convincing the world that it is deadly serious about reclaiming its place among the leaders of the digital media world."For anyone focusing on Web content, buying up properties like Huffington Post and tech blog TechCrunch -- as AOL did recently -- is logical. But AOL is paying a hefty price.
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The New York Times' Dealbook says the purchase is yet further proof that AOL CEO Armstrong isn't shy about waving around the company checkbook, noting that the Dulles, Va., Internet pioneer has purchased more than a half-dozen companies in the last 20 months.In addition to bringing together the HuffPo, Engadget, and TechCrunch, the move will also add other AOL properties including PopEater, Mapquest, Moviefone and others. All told, the idea is clearly that the group will offer content aimed at the widest-possible range of readers: politics junkies, techies, housewives, car nuts, movie freaks and more. By doing so, it will be well-positioned to take on the other leaders in the mainstream online media space, such as Gawker Media.
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In its piece on why AOL wants HuffPo, The Economist's Newsbook blog dispenses with Armstrong's stated reasons for the purchase, which include womens' dominance in determining how discretionary income is spent and the effect influencers (such as HuffPo) have on buying decisions. Instead, Newsbook opines that AOL simply wants to attract more eyes to websites through online searches and HuffPo will provide that.The Huffington Post deals [sic], which represents Mr. Armstrong's most expensive move to date, is part of his larger strategy to reshape AOL into a content empire.
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Reuters' Felix Salmon compares Armstrong's move to that of Si Newhouse in naming publishing veteran Tina Brown three times to lead efforts to reverse declining relevance and revenues at three titles: Tatler, Vanity Fair and The New Yorker.The truth is that AOL's content is really meant to appeal to search engines, rather than humans of either sex. The company's model is to produce content of various types that scores well in web searches, attracting lots of readers who can then be bombarded with advertising. The champion of this approach is Demand Media, a so-called "content farm" that recently went public and is now worth more than The New York Times.
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In a piece titled "SEO Speedwagon," Slate media columnist Jack Shafer writes that he -- like other observers -- underestimated Huffington's ability to succeed in essentially repackaging pieces from other news organizations to draw traffic to her site. Shafer says Huffington is "not much of a journalist," adding she didn't let her lack of gravitas in the industry impede her.Arianna Huffington is newer to this game, but Tim Armstrong is surely willing to throw even more money at Arianna than Si Newhouse threw at Tina. Armstrong needs this bet to succeed -- he's placed Arianna in charge of all his media properties, while telling everybody that AOL is a media company first and foremost.
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The New Yorker's Ken Auletta equates AOL's purchase of HuffPo to a "fourth-quarter Hail Mary pass."[T]hose limitations actually gave Huffington an advantage over other sites -- Slate included -- that hewed to old-media standards. Old-media types don't feel right about rewriting the copy of their competitors and calling it a story. Huffington glories in carving the meat out of a competitor's story, throwing a search-engine optimized (SEO) headline on it, and posting it. She even claims to believe that she's doing the originator a favor by sending traffic back to it via a crediting link.
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Finally, former DailyFinance media columnist Jeff Bercovici, who now writes for Forbes.com, says the AOL/HuffPo deal "is by far the biggest move that Armstrong has made in his time at AOL."But as Ben Roethlisberger reminded us in the Super Bowl yesterday, quarterbacks can go from hero to bum if they fail to get in the end zone. . . . But by placing AOL's content efforts under the Huffington Post umbrella, Armstrong demonstrates that he understands that AOL can't win by gaining a few yards at a time. He had to scramble and throw a long pass, and he has.
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Bercovici also notes that AOL's share price took a hit in Monday trading on Wall Street in reaction to the deal, typical in merger transactions. AOL stock was down about 2.8% to $21.32 a share in mid-afternoon trading.And, while, it's certainly unexpected, it doesn't come entirely without foreshadowing: Three weeks ago, AOL made deals to outsource its content production in several areas, including sports and health, with Armstrong saying, "We're going to partner in areas where we have a better chance of winning with partners."