AOL Buys HuffPost for $315 Million

It's a marriage of an online pioneer and a dot-com upstart with the Sunday night announcement th

at AOL is acquiring The Huffington Post and with it Arianna Huffington, who will serve as president and editor-in-chief of The Huffington Post Media Group, a new subsidiary of America Online.

Huffington will oversee all Huffington Post and AOL content, including its (recently acquired) tech sites Engadget and TechCrunch, as well as a variety of entertainment and lifestyle sites. AOL has been beefing up its news operation of late, especially hiring local community reporters for its Patch.com site.

The combined press statement -- dated February 7 and released just after midnight Eastern Time -- describes the merger as creating "a next-generation American media company with global reach," in a statement attributed to AOL Chairman and CEO Tim Armstrong. The scoop appears to go to All Things Digital, which notes that HuffPo only recently claimed profitability and the purchase price is a fairly standard five times the site's $65 million anticipated annual revenue.

Arianna Huffington
Photograph: Courtesy of Huffington Post
In a statement on her blog (natch), Huffington herself declares that she and co-founder Ken Lerer "would have been hard-pressed to imagine this moment" at the HuffPo's founding nearly six years ago. She says the arrangement will let her "take HuffPost to the next level" -- which she describes as more local sections, international editions, emphasis on service, original video on the site, and new sections. She says AOL contacted her.

Armstrong has been at the AOL helm for not quite two years, jumping from head of sales at Google to take on the rebuilding of AOL after its 2009 divorce from Times Warner. (Google itself took a $717 million loss on its investment in AOL the same year.) Clearly, Armstrong likes a challenge.

Only last month, an analysis in The New Yorker expressed skepticism that his vision of nurturing hyperlocal coverage is the path that will help AOL recover even a fraction of its former dominance. From its high of 35 million subscribers, today AOL is at 4 million; of course, hitting the family of websites doesn't require a subscription. Huffington Post claims 25 million unique visitors monthly. Citing ComScore, the new bedfellows say they'll reach 117 million unique visitors monthly in the United States and 270 million worldwide.

Cofounder Lerer's statement notes the Huffington Post's success creating "a potent brand" that has drawn traffic, informed and entertained, and a goo

d fit with AOL. Huffington herself says the merger will enable the organization to expand more quickly in areas she wanted to go.

It's an interesting pairing. AOL has certainly gone through its ups and downs, from its role as the behemoth of early Internet access by consumers to boldly acquiring the so-called old media company Time Warner and -- theoretically -- leading media into the digital 21st century. But it was a tough and expensive partnership, occurring just before the dot-com bust, and AOL found itself becoming a punchline reference as an unhip relic overlooked in a wave of new (and often very vertical market) competitors.

That said, AOL's recent hiring of nearly a thousand journalists in the past year (we've noticed the ads!) for hyperlocal coverage has been intriguing, even if the point wasn't entirely apparent. Many of those hires were newspaper alumni happy to still be paid for reporting, writing and editing.

For its part, HuffPo has lured away some experienced journalistic talent in its half-dozen years, including many who served time on the tech beat. One wonders how they'll like working for AOL. But with the acquisition, HuffPo becomes a publicly traded company; it will make it easier to track what the investment world, at least, thinks of the job they're doing.

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