February 8, 2011

AOL and Huffington train wreck

Train wreck
Does this train wreck make any sense? AOL is buying The Huffington Post in an effort to do what? Rebuild it's online empire, which has faltered over the last decade?

As Business Management noted last spring,
Last year AOL finally parted company with Time Warner after one of the most disastrous mergers in business history. Since buying Time Warner for $160 billion in 2001, AOL has hemorrhaged cash and market share after a string of bad decisions stemming from faulty predictions about the direction of web growth.
So AOL is betting on The Huffington Post to overcome a decade of decline? It's not going to happen. While The Huffington Post is a heavy hitter as blogs go, it's no media empire. The business model for AOL isn't the same as HuffPo either. Despite that, Bloomberg reports;
AOL Inc.’s deal to purchase the Huffington Post is more than a bet on the website’s financial prospects. It’s a wager on the ability of co-founder Arianna Huffington to build an online media empire, analysts say.

Under the $315 million acquisition agreement, Huffington, 60, will join AOL and become president and editor-in-chief of a newly formed media group. In the position, she’ll oversee all of New York-based AOL’s content, from the TechCrunch blog to the Patch local news sites to new content initiatives.

While the goal is to help AOL become a more powerful force in online advertising, there’s a risk in putting Huffington in charge of editorial, said Rob Enderle, a San Jose, California- based technology consultant. Her political views, often critical of corporations and Republicans, may be polarizing, he said.
Brent Bozell analyzed it the following way,
"They must be in such dire straits that they’ve been blinded by the millions and think an acquisition of The Huffington Post is worth sacrificing credibility and objectivity,” Bozell said. "AOL News is fooling only itself in thinking there is no journalistic conflict in merging with a hate-filled, vicious, radically left-wing rag.”
It goes beyond Bozell's comments however. AOL has a poor track record at mergers and acquisitions. In fact ever since it lost it's near monopoly on the Internet in the early days it has done far more faltering than anything else. This will not help AOL and it is far more likely to be yet another nail in the corporate coffin.


Disagreement is always welcome. Please remain civil. Vulgar or disrespectful comments towards anyone will be removed.

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