What does the merger mean for AOL, Huffington Post?

Jeremy Hobson Feb 7, 2011
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What does the merger mean for AOL, Huffington Post?

Jeremy Hobson Feb 7, 2011
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JEREMY HOBSON: The company that brought millions of Americans dial-up internet access in the early days of the web is making a $315 million bet on its future. That’s how much AOL is paying for the five-year-old left-leaning news site, The Huffington Post.

The deal was announced early this morning and let’s get reaction from Henry Blodget, the CEO of Business Insider. Good morning.

HENRY BLODGET: Good morning.

HOBSON: So let’s start with The Huffington Post, Henry. What’s in it for The Huffington Post to be taken over by AOL?

BLODGET: I think for Huffington it’s $300 million in cash, which isn’t probably looking too bad given that the site was founded about five to six years ago. And also just a much bigger platform. You can say what you like about AOL, but it has a huge group of readers and users and a big subscription business. And for Arianna Huffington that’s obviously a very big platform. And she’ll now be head of the whole content business.

HOBSON: And why does AOL want Huffington Post?

BLODGET: For AOL this is Hail Mary pass. If the company does nothing, it will go out of business slowly. And right now it is accruing a very big pile of cash because it’s still profitable. It has to figure out a business in the next couple of years, or it really is going to die. So basically it’s Tim Armstrong, the CEO, saying let’s make a big bold move, get a good new brand, and make a full bet on that.

HOBSON: Alright now obviously Huffington Post is a very popular website, but it’s also a politically liberal website. How does that figure into the calculation for AOL?

BLODGET: That’s going to be very interesting to see how that handle that. AOL right now is politically neutral, so given that Huffington Post is left-leaning, I would not be surprised to see them try to complement that with something on the right side because there’s no reason for them to take a political position as a media company. It’s possible that they now want to be a left-leaning media company. I don’t know, but that is an unusual and big question that’ll be going forward.

HOBSON: Henry Blodget, CEO of Business Insider. Thanks so much for your time thing morning.

BLODGET: Thanks for having me.

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