Anyone who has been on AOL.com in recent years can undoubtedly attest to the site’s lack of quality journalism. Titles such as “Don’t Mess With This ‘Grandma’” and “Taste-Testing New Wendy’s Sandwich” litter the site, tributes to “The AOL Way.” The AOL Way refers to a recently leaked AOL memo profiling the company’s goals and methods for attracting readers.
Editors are instructed to choose stories based on traffic potential, revenue potential, edit quality and turn-around time. Other goals proposed by AOL CEO Tim Armstrong include increasing the number of stories that feature videos and optimizing stories for search engines.
The memo reinforces the idea that companies like AOL and Yahoo are content to throw investigative journalism to the wayside in favor of “filler” stories. This approach reflects AOL’s history as a portal and not as a respected name in news. But is all that about to change?
On Sunday, AOL announced that it had purchased the Huffington Post for $300 million in cash and $15 million in stock. The acquisition is an unqualified success for the Huffington Post, which was created in 2005 with just a $1 million investment. Huffington herself is netting around $100 million in the deal, as well as a brand new title, namely editor-in-chief of AOL’s content division. The online newspaper’s audience will immediately surge to over 100 million unique viewers each month.
For AOL, the acquisition is less straightforward. Many concerned stockholders are certainly wondering whether this newest high-profile acquisition will help AOL. AOL has been struggling since regaining its independence as a separate public company in 2009 after its disastrous $350 billion merger with Time Warner in 2000, often termed one of the worst mergers in history.
However, AOL stockholders should not worry because the Huffington Post acquisition has much less in common with the AOL-Time Warner merger than with AOL’s more recent acquisitions of niche market media companies including Engadget, Techcrunch and Patch.com.
The goal of the AOL-Time Warner merger (at least from AOL’s point of view) was simple. AOL was the dominant force in dial-up internet, but needed Time Warner’s broadband services and content to help keep the company current in the rapidly advancing internet age. The deal ideally would have created the first complete media company of the Internet Age. AOL hoped that people would come to AOL for all of their news. However, the deal was over-priced due to a huge stock bubble and the two companies failed to synergize. AOL never became a trusted name in journalism and Time Warner eventually spun AOL off.
Through the purchases of Huffington Post and the other smaller news company, AOL is attempting to bolster its content by throwing money at popular, recently created companies rather than develop content itself. The Huffington Post has grown to establish itself as a forerunner in the online news market. With 25 million unique viewers a month, it will bring a huge, devoted following to an ailing AOL.
More important is the way that the Huffington Post has garnered this attention. One reason is because of its high profile writers, including Barack Obama and Hillary Clinton, not to mention its founder and namesake, Arianna Huffington. Huffington, who has risen to celebrity status in recent years, is an avowed liberal, and her site is no more impartial.
Some people may lament that AOL, a multibillion-dollar media giant, has given over the reins to such a left-leaning journalist. However, the fact of the matter is that more and more people want to read opinionated news now, regardless of the inherent bias.
Ideally for AOL, Huffington can smoothly and quickly implement massive changes and lead the transition to more relevant content and thus crown AOL the king of the internet once again — or, at least, make AOL a respected player in the world of internet journalism, which is distinctly possible.
However, a rougher transition is more likely. Huffington is being thrown into the deep end, and, despite her qualifications and competence, the fact that she has no experience managing anything near AOL’s size is plain for everyone to see.
Furthermore, the Huffington Post is an aggregation news site, meaning that it collects news from other places and brings them together in one place. Huffington has been criticized for this approach, but her success reflects the readers’ approval. The Huffington Post has complemented the aggregated news with stories broken by its own reporters as well as pieces written by popular contributors.
The Huffington Post does devote a significant proportion of its content to filler stories as well. Celebrity stories in particular are among the most popular on its website. Currently, a video of Christina Aguilera blundering the national anthem has over 5,000 comments. It remains to be seen whether the pressures and content demands of AOL will force Huffington to resort to more of these stories.
On the flip side, AOL’s gargantuan resources could allow her to improve the quality of the stories, while still meeting AOL’s demands for traffic. The upside is huge for AOL, while the risk is relatively small. $315 million is a lot of money, and the $300 million in cash accounts is 40 percent of AOL’s cash reserve. There is a lot riding on this merger, but the risk is only a fraction of that of the AOL-Time Warner merger.
At the very least, the stir caused by this acquisition will cause a spike in traffic from eager or curious readers. Whether AOL will be able to compete with news giants like the New York Times or the Washington Post remains to be seen.
However, it is very unlikely that Arianna Huffington, who has an astute eye for business, would have sacrificed her company for a quick, albeit large, payday. Most likely, Huffington will slowly but surely improve both AOL’s miserable content and their plummeting readership. All I know for certain is that I will definitely be periodically checking up on AOL.com.
