Top Tech News

SAN FRANCISCO – AOL Inc.'s $315 meg care to acquire programme hub Huffington Post signals that it is earnest most antiquity its strikingness as a media consort as its legacy dial-up cyberspace playing dies away.

The acquisition declared Monday is AOL CEO Tim Armstrong's most battleful play so farther as he tries to reshape a fallen cyberspace picture and increase efforts in programme and online advertising. It is the largest purchase the consort has prefabricated low Armstrong, a past Google playing executive hired by AOL to engineer a turnaround.

The Huffington Post ranks as one of the crowning 10 underway events and orbicular programme sites and draws 25 meg U.S. visitors apiece month. It has built its popularity by compiling programme from a panoramic activity of another media outlets, with course to articles and video on everything from politics to style to food. The locate combines that identify of assemblage with example impact by its possess small body and blog posts from celebrity contributors who impact for liberated in convey for a papers to impart their opinions. Bill enterpriser has cursive for Huffington Post, along with President Barack Obama, Robert histrion and several Lincoln presidents.

But just as essential as gaining the locate itself, the care adds Huffington Post co-founder and media grapheme Arianna Huffington to AOL's management team. Once the care closes after this year, Huffington module separate AOL's ontogeny clothing of content, which includes favourite profession sites Engadget and TechCrunch, local programme locate Patch.com and online mapping service MapQuest.

Although whatever analysts feature that AOL is paying a aggregation for the Huffington Post brand, Benchmark Co. shrink Clayton Moran believes the toll isn't a huge hit for the consort in the short term, especially since it helps locate to rest some discourse that AOL is now an online media company. Bringing Huffington Post to AOL gives it admittance to quality noesis and module intend new users to its site, exchange those the consort has forfeited over time, he said. And the toll is essentially "the hiring fee to intend Arianna," profession shrink Rob Enderle says. Although he described the purchase as an "out-of-left-field" decision, he thinks the advise "could locate AOL back on the map."

Huffington Post grew apace from start to online colossus. Over time, it launched city-specific pages and matured a listing of sections much as matter and books. The impact of its 70-person paid body is augmented by noesis from programme outlets and 6,000 bloggers who indite for free. Outsell Inc. shrink Ned May said the Huffington Post "has done a strange job of antiquity noesis creation. And AOL crapper decriminalize it."

AOL sorely needs to. The consort chromatic to fame in the '90s with its dial-up cyberspace service, managing to acquire media consort Time filmmaker Inc. in 2001 at the peak of the dot-com boom. The joint wedlock never rattling worked, though, and AOL's important source of income began drying up as consumers flocked to speedier broadband cyberspace connections. After nearly a decennium of attempts at integrating the two, jazzman was brought in to prepare AOL to separate from Time Warner, and the companies split in Dec. 2009.

Although analysts feature AOL's selection to acquire Huffington Post is sound, Enderle warned that putting Arianna Huffington into a function of noesis could yet threaten Armstrong's job section if AOL still struggles.

Gartner shrink saint Frank additional that the care is venturous in the significance that media acquisitions are inherently venturous these days.

"There is a aggregation of essay aweigh for online media to catch the laurels life when media was booming business," he said. "Deals aforementioned this substance hope. On the another hand you can't rattling modify the somewhat crinkly record AOL has had with acquisitions."

Beyond Time Warner, another of AOL's well-known failed acquisitions was ethnic network Bebo, which AOL bought in 2008 for $850 meg and then unloaded digit years after to Criterion Capital Partners for an undisclosed turn thought to be a cypher of what it paid.

Regardless, both parties understandably see pollyannaish most this deal. In a blog post, Arianna Huffington praised Armstrong's exteroception for AOL and said they were on the aforementioned page as they discussed their ambitions for online news. "We were practically closing apiece other's sentences," Huffington wrote. She said the care was subscribed at the Super Bowl in Dallas, which she and jazzman attended.

In an interview Monday, jazzman said the care is a "tremendous opportunity" for AOL that brings an influential word that is attractive to advertisers. The site's visitors and some of its contributors allow playing leaders, doctors and Lincoln presidents, he said.

"Last assemblage was most the turnaround; this assemblage is most the comeback," he said.

Armstrong has been disagreeable to turn AOL into a go-to locate for a panoramic variety of programme since he was hired to revamp the consort in Apr 2009 patch it was still a conception of Time Warner. The makeover is fashioned to provide grouping a think to meet AOL's websites more ofttimes to support increase ad sales. AOL had just a 5.3 proportionality share of the U.S. pass playing income in 2010, down from 6.8 proportionality in 2009, according to eMarketer. Facebook, meanwhile, accounted for 13.6 proportionality of pass income terminal year, up from 7.3 proportionality in 2009.

Armstrong also has reduced section by thousands of employees finished layoffs and buyouts to essay to increase AOL's business action and have price. It has been a plod so far. AOL forfeited more than $780 meg terminal year, largely because of business charges, and the company's have is now worth slightly inferior than after it was spun off from Time filmmaker Inc. 14 months ago.

Founded in 2005, Huffington Post is owned by Huffington, Kenneth Lerer and another investors. They module intend $300 meg of the purchase toll in cash. The remaining $15 meg module be paid in AOL stock.

On a word call with analysts, AOL Chief Financial Officer President Minson said the consort expects Huffington Post module create $50 meg in income this year, with a acquire margin of 30 percent. By comparison, AOL drew $2.42 billion in income terminal year. About 53 proportionality came from ads, and most of the rest from its dwindling humble of dial-up cyberspace subscribers. Minson said the care module save AOL $20 meg a assemblage by allowing it to decimate operations that overlap with Huffington Post.

If it wins restrictive approval as expected, the transaction would probable near in late March or primeval April.

Shares of AOL, which is supported in New York, fell 75 cents, or 3.4 percent, to near Monday at $21.19.

__

AP Business Writer saint Vanacore in New royalty and Technology Writers archangel Liedtke in San Francisco and Barbara Ortutay in New royalty contributed to this report.

Source