In a bid to reignite its growth, AOL to buy the Huffington Post

In a bid to make itself relevant again, struggling Internet pioneer AOL Inc. announced late Sunday that it would buy the Huffington Post, the well-known news and opinion site, for $315 million in cash and stock.

As part of the deal, Huffington Post co-founder Arianna Huffington will oversee a new group responsible for bringing together all
editorial content from both companies including news, technology, music
and local media websites.

The deal, which was signed Sunday with approval from
the boards of both companies, is something of a gamble for AOL, which
is looking to reignite growth in advertising revenue.

The Huffington Post could give AOL a much-needed
boost in talent, traffic and ad inventory. Perhaps more important, it
could also give the company an image makeover.

But it remains to be seen whether the acquisition will be the turning point AOL Chief Executive Tim Armstrong has been looking for in his strategy to transform AOL into major purveyor of content and advertising.

So far his efforts have yet to wow Wall Street. Armstrong, a former top Google Inc. executive, has said he is placing his faith in the future of content on the Web.

That would make the Huffington Post a natural target
for acquisition. The high-traffic website has been the talk of
acquisition rumors and even an initial public offering.

It got its start in 2005 as a liberal blog with a tiny staff and a $1 million
investment, growing since then into one of the most visited news
websites in the U.S. It had 25 million unique visitors in December,
according to research firm ComScore.

The combination of the two firms will reach a total of 117 million unique U.S. visitors, according to AOL.

AOL has been looking to reinvent itself as a standalone entity since it disentangled itself in 2009 from its merger with Time Warner.

Going it alone, the company has focused on ramping
up its editorial content, betting it can make a comeback by selling ads
alongside its articles, videos and other original items. It’s
concentrating on display advertising and local advertising — types that
search giant Google does not dominate.

AOL, with its blogs on autos, music, sports and
news, as well as its local news site Patch.com and video production
resources, had the tools to help the Huffington Post meet its goals,
Huffington said.

The Huffington Post will have something to prove as
well. It has been criticized for aggregating content from other news
sources rather than creating its own.

It has recently begun to hire experienced journalists from mainstream media outlets to produce original reporting.

This is AOL’s biggest acquisition since it parted ways from Time Warner. The deal is likely to be completed in the first quarter or early in the second, AOL said.

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