Posted on | August 31, 2011 | 14 Comments
Arianna got the gold mine, AOL got the shaft:
AOL is up for sale according to many insiders in the know. Sources in the industry claim that AOL has met privately with the mega-law firm Watchell, Lipton, Rosen & Katz and investment bank Allen & Company about putting the former ISP up for sale to the highest bidder.
While AOL is generating significant revenue of at least $1 Billion for the first 6 months of 2011, they are still losing a great deal of money and the purchase of HuffPost hasn’t helped their woes.
The HuffPost purchase, which was valued at $315M was widely criticized by both the press and pundits alike as a poor purchase decision, or at least one that didn’t make sense at those numbers. Since then, the merger of the company into AOL has been reported to have numerous management problems.
Despite HuffPost continuing to grow since its purchase, the advertising sales revenue has not been able to sell inventory at the level needed to support the organization. Part of the problem reportedly is that the sales team, lead by search advertising veterans has been unable to convince advertisers that they need to pay a premium cost to be on HuffPost and other AOL properties. . . .
AOL seems to now be desperate to find either a buyer, or at least a long term solution to solve their issues. It is clear that their management, seen by many as top heavy salary wise, is not suited to run a content company that needs to focus on cost cutting.
Look: Online advertising is a hard dollar. Advertisers either pay for page-views or pay for click-throughs, and they’ve got software to measure the actual performance of each ad buy. The idea that HuffPo readers are somehow special, so that advertisers should pay a “premium” to have access to those readers . . . well, why?
There is no plausible answer, nor is there any plausible answer for why a value-oriented investor would have paid anything like the $315 million AOL paid for HuffPo. That deal never made sense.