SAN FRANCISCO — AOL Inc’s $315 million deal to buy news hub The Huffington Post signals that it is serious about building its profile as a media company as its legacy dial-up Internet business dies away.
The acquisition announced Monday is AOL chief executive Tim Armstrong’s most aggressive play so far as he tries to reshape a fallen Internet icon and boost efforts in news and online advertising. It is the largest purchase the company has made under Armstrong, a former Google advertising executive hired by AOL to engineer a turnaround.
The Huffington Post ranks as one of the top 10 current events and global news sites and draws 25 million U.S. visitors each month.
Just as important as gaining the site itself, the deal adds Huffington Post co- founder and media star Arianna Huffington to AOL’s management team. Once the deal closes this year, she will run AOL’s growing array of content, which includes technology sites Engadget and TechCrunch, local news site and online mapping service MapQuest.
Although some analysts say that AOL is paying a lot for the Huffington Post brand, Benchmark Co. analyst Clayton Moran believes the price isn’t a huge hit for the company in the short term, especially because it helps put to rest any question that AOL is now an online media company.
Bringing Huffington Post to AOL gives it access to quality content and will drive new users to its site, replacing those the company has lost over time, he said. And the price is essentially “the hiring fee to get Arianna,” technology analyst Rob Enderle says.
Although he described the purchase as an “out-of-left- field” decision, he thinks the move “could put AOL back on the map.”
Although analysts say AOL’s decision to buy The Huffington Post is sound, Enderle warned that putting Huffington into a position of power could threaten Armstrong’s job security if AOL struggles.
Gartner analyst Andrew Frank added that the deal is risky in the sense that media acquisitions are inherently risky these days.
“There is a lot of effort ahead for online media to recapture the glory days when media was booming business,” he said. “Deals like this offer hope. On the other hand you can’t really dismiss the somewhat uneven record AOL has had with acquisitions.”
Armstrong, in an interview, called the deal a “tremendous opportunity” that brings an influential audience attractive to advertisers. The site’s visitors and contributors include business leaders, doctors and university presidents, he said.
