Siliconcowboy's Blog

Technology, journalism, social media and social responsibility

Huffington Post and AOL: The Sleeper has Awakened

Just when you thought AOL was gone and dead, Wham! they hit it with the cardio paddles again, this time with the acquisition of Huffington Post.

For just $315 million ($300 million in on-hand cash), Huffington Post now becomes the Huffington Post Media Group within AOL and Arianna Huffington becomes the group’s first president and editor in chief. More important, she carries into AOL a vision and energy that very well could take both Huffington Post and AOL “to the next level.

The deal was signed at the Superbowl.

The acquisition is in stark contrast to AOL’s purchase last September of Michael Arrington’s TechCrunch which, though it has a strong following in the tech community, is still not much more than an expanded series of tech blogs and an associated, trendy annual meet-up in San Francisco. That organization is now folded within AOL’s Tech Media organization (along with Engadget) and continues to exist as a relatively independent organization. (Some reports indicated that Arianna Huffington could have direct control over TechCrunch and Engadget, but that is not clear at this point.) The purchase price for TechCrunch was never disclosed, but insiders pegged it at $40 million including $25 million in cash.

Huffington Post, on the other hand, is a full-scale media franchise with a vision to become much, much larger.

The organization has all the finesse and intelligence of the best metropolitan newspapers, magazines, and television stations combined. Its coverage range extends far and wide, and it achieved high visibility for its coverage of the 2008 presidential election. It has a strong vision that extends several years into the future.

But most important, it aligns extremely well with what AOL Chairman and CEO Tim Armstrong feels is necessary to move his organization back into the digital limelight.

As Huffington put it in her blog today, describing the meeting where Armstrong first proposed the acquisition:

“I flashed back to November 10, 2010. That was the day that I heard Tim speak at the Quadrangle conference in New York. He was part of a panel on “Digital Darwinism,” along with Michael Eisner and Adobe CEO Shantanu Narayen.

At some point during the discussion, while Tim was talking about his plans for turning AOL around, he said that the challenge lay in the fact that AOL had off-the-charts brand awareness, and off-the-charts user trust and loyalty, but almost no brand identity. I was immediately struck by his clear-eyed assessment of his company’s strengths and weaknesses, and his willingness to be so up front about them.

As HuffPost grew, Kenny and I had both been obsessed with what professor Clayton Christensen has famously called “the innovator’s dilemma.” In his book of the same name, Christensen explains how even very successful companies, with very capable personnel, often fail because they tend to stick too closely to the strategies that made them successful in the first place, leaving them vulnerable to changing conditions and new realities. They miss major opportunities because they are unwilling to disrupt their own game.

After that November panel, Tim and I chatted briefly and arranged to see each other the next day. At that meeting, we talked not just about what our two companies were doing, but about the larger trends we saw happening online and in our world. I laid out my vision for the expansion of The Huffington Post, and he laid out his vision for AOL. We were practically finishing each other’s sentences.

Truly a sign of great alignment, and a harbinger of great things to come.

In fact if you read into Huffington’s statement deep enough, you’ll see a complete vision for what is to come at AOL moving forward.

The really interesting thing about this match-up is that it takes Huffington Post out of the nowhereville political contest with Glenn Beck and Fox Media, and sets both Huffington Post and AOL squarely against Steve Jobs and Apple Computer, as well as Rupert Murdoch and even the New York Times, as a competitive force in the much larger battle for the digital media enterprise.

How the acquisition influences the look and feel of Huffington Post, and digital media in general, will be an exciting thing to watch.

Of course, one big question that comes out of this is, whether Huffington Post maintains its decidedly liberal editorial position. My guess is that it will continue to maintain its editorial integrity, if only because that is the fuel upon which much of the editorial staff thrives (although the expansion into international editorial offices will do much to temper the perception).

How will this work with AOL’s audience, which is made up primarily of families with a strong interest in keeping children safe online? I’d be surprised if they weren’t generally well received, but the question does bring up the prospect that AOL could have other acquisitions up its sleeve.

Stay tuned.

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2 comments on “Huffington Post and AOL: The Sleeper has Awakened

  1. Ann Starke
    February 7, 2011

    I am an active participant on Huffington Post and have decidedly mixed feelings about the merger. I will be very disappointed if they dilute their llberal leanings.
    I do have one question, Dan. I understand how the merger pits AOL and HP against Rupert Murdoch and the New York TImes, but in what way does it do the same against Steve Jobs and Apple?

  2. siliconcowboy
    February 7, 2011

    Hi Ann, and thanks for your question! Basically, there are only a small number of media companies that are large enough to seriously influence the business model for news media in the next decade. The AOL-Huffington Post acquisition adds another player to the mix, along with Murdoch and, yes, Steve Jobs and Apple. Here’s why.
    For the last year or so, particularly since the introduction of the Apple iPad, Jobs has been strategically positioning his company to be the provider of the media platform (iPad) to replace print media. At the same time, because his company has the largest apps store anywhere, he’s in a position to influence the news business model of the future, e.g., turning newspapers into subscription-based apps.
    AOL has been working on a competitor to this, and with the addition of Huffington Post, it now has a media partner to back its play.

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