AOL buys Huffington Post for $300 million

February 6, 2011

Wall Street and Internet users are waiting for the news, expected Monday morning that AOL will buy the liberal news web site The Huffington Post for an estimated $315 million. [NY Times]

The high-profile deal, apparently sealed over the weekend gives Arianna Huffington $300 million in cash and another $15 million in AOL stock for the political site she first launched in 2005.

Huffington, the cable talk show pundit and former wife of ex-Republican congressman Michael Huffington, will take control of all of AOL’s editorial content as president and editor in chief of a newly created Huffington Post Media Group. The arrangement will give her oversight not only of AOL’s national, local and financial news operations, but also of the company’s other media enterprises like MapQuest and Moviefone.

he deal has the potential to create an enterprise that could reach more than 100 million visitors in the United States each month. For The Huffington Post, which began as a liberal blog with a small staff but now draws some 25 million visitors every month, the sale represents an opportunity to reach new audiences. For AOL, which has been looking for ways to bring in new revenue as its dial-up Internet access business declines, the millions of Huffington Post readers represent millions in potential advertising dollars.

While Huffington Post has been growing — it now employs more than 200 people, a threefold increase in just the last few years — AOL has been shrinking. Last year it eliminated close to 2,500 positions, roughly a third of its staff. Although its most recent earnings estimates beat Wall Street expectations, revenues for the fourth quarter were down 26 percent from a year earlier as dial-up customers continued to disappear. Ad revenue, which is seen as the company’s main business going forward, was down 29 percent from the year before.

Michael and Arianna Huffington lived in Montecito in early ’90s and became well-known on the Central Coast when Michael Huffington was elected to Congress from the 22nd District in 1992.

In 1994, Huffington came within a few thousands votes of defeating Dianne Feinstein in the California U.S. senate race. The Huffingtons divorced shortly after the 1994 election, when Michael Huffington announced he was gay.