What Does AOL’s Acquisition of The Huffington Post Signify about Media?

The news that AOL purchased The Huffington Post for $315 million shook the journalism world.  Liberals lamented the potential demise for one if their most potent voices.  Business commentators debated the deal’s financial implications for the past Internet titan.  But the most important question is what does this convey about media as a whole?

We have previously highlighted statistics demonstrating the readership decline for traditional print newspapers, particularly in our article “The Power of Online Political News”.  The Huffington Post exemplifies a successful online media model.  The publication, started in 2005 by founder Arianna Huffington and a core group of contributors, leverages an array of news sources and columnists to delve into a multitude of subjects, particularly progressive politics.  In 2010 the publication posted its first profit, a virtually non-existent concept among print media publications today.

AOL is betting its future on the idea that online media will maintain its profitability.  The company, which once stood as the stalwart for connecting people to the Internet, is experiencing difficulty as its original business model – dial-up Internet service – becomes obsolete.

AOL operates dozens of online media publications including TechCrunch, Patch, and PoliticsDaily.  According to this e-mail from CEO Tim Armstrong, AOL is integrating its media brands under the Huffington Post Media Group, with Arianna Huffington serving as president and editor-in-chief.

“We continue to put significant bets behind our strategy of high quality content and advertising at scale – on AOL properties and our growing network of publishing partners,” said Armstrong.

“By combining HuffPost with AOL’s network of sites, thriving video initiative, local focus, and international reach, we know we’ll be creating a company that can have an enormous impact, reaching a global audience on every imaginable platform,” said Huffington in a note to her publication’s readers.

Traditional newspapers will continue to maintain an important presence in American culture, but their decline will persist in the face of deteriorating readership and consolidations.  Warren Buffet, investment tycoon and chairman of Berkshire Hathaway, noted that “the newspaper business will be tougher and tougher and tougher, and it is already plenty tough.  While the [The Washington Post] is the centerpiece of the Washington Post Company, that doesn’t mean it will earn the most money.”[i]

The AOL and Huffington Post merger is a bet on media’s future.  According to Huffington, AOL just finished building a pair of state-of-the-art video studios in New York and Los Angeles, and video views on AOL have gone up 400 percent over the last year.[ii] This changing media dynamic will continue to alter political campaigning and governing, accentuating the importance of new media, video, and future technological innovations to promote legislative achievements.


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