AOL to purchase Huffington Post for $315 million

by ForstAMoon Mon Feb 07, 2011 3:38 am

AOL agrees to purchase Huffington Post for $315 million

By the CNN Wire Staff
February 7, 2011 -- Updated 0746 GMT (1546 HKT)

AOL has agreed to purchase The Huffington Post for $315 million, the companies announced Monday.

STORY HIGHLIGHTS
Statement: Arianna Huffington will be named president of The Huffington Post Media Group
The new group will include all Huffington Post and AOL content
The group is expected to have a combined 270 million unique visitors worldwide

(CNN) -- AOL has agreed to purchase The Huffington Post for $315 million, the two entities announced in a joint news release Monday.
"As part of the transaction, Arianna Huffington, The Huffington Post's co-founder and editor-in-chief, will be named president and editor-in-chief of The Huffington Post Media Group, which will include all Huffington Post and AOL content," the statement said.
The new group will have a combined 117 million unique visitors a month in the United States and 270 million around the world, according to the release, which cited December 2010 data from the marketing research company comScore.
"Our readers will still be able to come to the Huffington Post at the same URL, and find all the same content they've grown to love, plus a lot more -- more local, more tech, more entertainment, more finance, and lots more video," Huffington said in the statement.
The boards of directors of each company and shareholders of The Huffington Post have approved the transaction, but the proposed transaction is subject to customary closing conditions, including receipt of government approvals, the two groups said.
The transaction is expected to close in the late first- or early second-quarter of this year, according to the statement.

by ForstAMoon Mon Feb 07, 2011 3:49 am

One big family on its way.... AOL, TMZ, Huffington Post...who next?

by Grace Mon Feb 07, 2011 1:47 pm

Not so sure if that was a good deal (at least not for getting "more unique users")...
Usually companies fight for market shares and gaining market share by binding "free users" to their products (so they don't end up with competition). Well...

AOL's Huffington Post purchase: Worth nearly half of the cash balance?
By Larry Dignan | February 7, 2011, 9:50am PST

AOL on Monday paid $315 million—$300 million in cash—for the Huffington Post and while most are focusing on the content and editorial plans, observers may want to look at the balance sheet and future flexibility.

Simply put, AOL drained nearly half of its cash balance for Arianna Huffington and the gang. Nice deal for Huffington, but you have to wonder if AOL spent too much.

Here’s a quick look at the numbers.

The cost:

* $801.8 million: AOL’s cash and equivalents balance as of Dec. 31.
* $300 million: Cash handed over for the Huffington Post.
* $501.8 million: New cash balance.
* $107 million: Cash flow in the fourth quarter
* 3 quarters: Approximate amount of cash flow AOL is paying for Huffington Post (if you assume AOL’s prospects stay on par with the fourth quarter).

The payoff:
* More unique users. (AOL and HuffPo has 117 million uniques in the U.S. and AOL Media reported 84 million U.S. uniques last week).
* Someone to run the content strategy. Huffington will now oversee AOL’s content operations.
* More than $50 million in additional revenue in 2011.
* Cost savings of about $20 million a year.

Was it worth it to AOL? If AOL used stock and cash perhaps. Draining the war chest on one bet, however, may be too risky given AOL’s financial profile and evolution. Hudson Square Research analyst Rory Maher generally likes the deal with a few caveats. Maher notes that Huffington Post is a property that fits well with AOL and cross promotion can drive traffic and ad revenue. The problems is AOL drained too much cash on Huffington Post. Maher writes:

“We believe there is material risk associated with spending nearly half of the company’s cash balance on one transaction.”

If HuffPo gives AOL the content juice it needs to complete its transformation and become a cash cow the deal was worth it. If not, $300 million in cold hard cash could sting.

http://www.zdnet.com/blog/btl/aols-huffington-post-purchase-worth-nearly-half-of-the-cash-balance/44532

by runfayalife Mon Feb 07, 2011 6:25 pm

Yowza!
That's a lot of cash for these "hard times" we are all supposed to be going though.

by MJonmind Tue Feb 08, 2011 2:21 pm

Snowball effect!

by Sinderella Tue Feb 08, 2011 3:56 pm

AOL Blog staff are quitting over it apparently

by Sinderella Tue Feb 08, 2011 3:59 pm

is this the same thread as mine?

by ForstAMoon Tue Feb 08, 2011 4:05 pm

Sinderella wrote:is this the same thread as mine?

yes, but a bit different timing Smile

same topic.

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