Patterico's Pontifications

2/7/2011

AOL Buys HuffPo for $315 Million

Filed under: Blogging Matters,General,Morons — Patterico @ 7:31 am

Since they get 500 million page views per month, that’s about $0.63 per monthly page view.

Wow.

That caused me to run a few numbers here. Over the past year we received 5,041,591 page views, for a monthly average of 420,133. Multiply that by $0.63 and you get a web site worth $264,683.

AOL finance dudes, listen up! Bargain of a lifetime: I’ll unload this puppy for a cool $200,000.

Call me, babe.

UPDATE: A commenter caught me cooking the numbers by turning the fraction upside down. Busted. I am changing the post to reflect the correct numbers. Dude, you just cost me over $400,000!

UPDATE: I should not have trusted the commenter. The actual number is not 57 cents, as he claimed, but 63. I updated the numbers yet again.

45 Responses to “AOL Buys HuffPo for $315 Million”

  1. unreal. did Zsa Zsa have incriminating photos of someone?

    Chris (6b0332)

  2. This is just bizarre. Surely they could have gotten it for a tenth of that. And it’s a damn website. Surely they could have simply launched a political website. If they followed Tucker Carlson or Breitbart’s model, all they need are a few great exclusives, and people will keep reading.

    This is amazing to me. AOL’s got a lot of websites, like Joystiq and Autoblog, and honestly, I never was impressed with their product. They completely missed the social network idea (which is amazing to me, since it was perfect for them).

    But it’s not my money. Congrats to Zsa Zsa Huffington.

    Dustin (b54cdc)

  3. How much did they subtract from the price for the Huffpo commenters?

    daleyrocks (479a30)

  4. Err….you did your math wrong. It’s about $0.57 per monthly page view. (315/500 not 500/315)

    [Sshhh! -- P]

    Xmas (a633e2)

  5. HuffPo has a few things going for it: very frequent new posts, celebrity T&A, local-focus subsections, eclectic mix of post topics. I stay away from their left-hand column of crazy lefty opinion, and the new-age/organic/Deepak Chopra-type stuff. Still, I didn’t think ANY website was worth a third of a billion dollars. But then, I didn’t know AOL was still around either.

    gp (72be5d)

  6. What a ripoff. I second the notion that they would have been better off just creating their own political blogging empire from scratch. They would just need to pop an ad here and there into their currently popular sites and perhaps put a small fraction of that 315 million dollars into developing original content.

    MANstreammedia (e69cd2)

  7. Think about how many hungry kids those lefties could feed with that money.

    Old Coot (a0cebb)


  8. Multiply that by $1.59 and you get a web site worth $666,878.

    Is that before or after the deductions for having to put up with kmart or timmi-b?

    Darth Venomous (a0b6a2)

  9. AOL is still in business? And it makes money?

    Maureen (726d82)

  10. AOL is still in business? And it makes money?

    Comment by Maureen

    Yes to the first, no to the second.

    And few lose money like AOL. I remember in 2002 they lost $100 billion.

    I laugh at anyone who invests in this company.

    Dustin (b54cdc)

  11. Err….you did your math wrong. It’s about $0.57 per monthly page view. (315/500 not 500/315)

    I got $0.63. That would make this blog worth about $265 grand. That’s still pretty good.

    Evan M (6539d2)

  12. Huff has about as much appeal to me as Kos, Andrew Sullivan, Little Green Footballs or DU. Seems like ridiculous price to me. If Huff post so great, why then couldn’t Air America make a go of it? AA had that “talent” in Stuart Smiley and Randi Rhodes. For that matter why does MSNBC lag so much when they had the great Olberdouche?

    My first ISP was Prodigy, which I believe initially was owned by Sears and last I heard was owned by Mexico Telephone. My perception was that it was horribly managed and although I never cared for AOL, AOL at least excelled at marketing their product.

    Wondering how many of you spent one cent for NY Times editorial content when they were charging a subscription fee for access? And how things would shake out if FCC controls internet?

    Calypso Louie Farrakhan (798aba)

  13. I understood the reasoning behind the purchase to be this: AOL started Patch, some sort of nation-wide community blogging thing. They have anemic page-views (I can’t find the article right now, but I think it had them at less than Patrick’s), and they have a staff of paid editors that will, by the end of the year, apparently number around 1,000 (currently in the 800′s, each pulling in around 40,000 – 50,000 a year).

    So they needed to find a way to increase traffic. HuffPo does that.

    Not that I care. I mean, when was the last time you used AOL for news? This just makes it one big thing to ignore, rather than 2 things.

    Scott Jacobs (d027b8)

  14. Yes to the first, no to the second.

    Actually, AOL is profitable lately. They’ve got some $700 million in cash right now.

    Some chump (4c6c0c)

  15. Some Chump, they lost over $700 million in 2010. They do have a couple billion in revenue, though only $150 million from advertising.

    They have a bad habit buying websites to make up for massive failures. They bought Bebo (a facebook or Myspace competitor) for $850 million. They sold it for $10 million.

    I know this sounds bizarre, but I don’t think AOL understands the internet. Like I said above, Breitbart and Tucker Carlson started news sites by having exclusive major news. The internet is about content, not super cool brands.

    For a tenth of what they paid Huffpo, they could have done amazing journalism.

    Dustin (b54cdc)

  16. Some Chump is right that they do have access to funding, obviously, since they are spraying cash out like Eric Cartman with a can of Redi-Whip.

    But this company used to be 50 times wealthier.

    Dustin (b54cdc)

  17. It also used to be one of the few ways to access the internet.

    Now? not so much.

    Scott Jacobs (d027b8)

  18. Reports also indicate the purchase price was 5 times annual revenue.

    Does that mean you’re making $133,375 annually from this site?

    To really compare, take whatever you earn annually from this site times five, and yes, I challenge you to post the figure.

    Fred the Analyst (3f1d17)

  19. I know this sounds bizarre, but I don’t think AOL understands the internet.

    Doesn’t sound at all bizarre to me. In 1997, as a freshman in college studying computer science, I had unlimited Internet access (via Ethernet in my room) for the first time, and I quickly learned that AOL didn’t get this whole “Internet” thing. Instead of making themselves an ISP, they were trying to hold on to their pre-1995 business model of building a “walled garden” of content, and making it well-nigh impossible for their users to break out of the walled garden. (The “access Internet sites outside AOL’s control” option was well-hidden in their confusing menu system). I still remember some of the nicknames the techie community at the time would give AOL: “America OFFline” and “A-O-Hell”.

    Seems to me they haven’t changed much in the past 14 years.

    Robin Munn (cd9337)

  20. So will she just pay the 15% capital gains rate on that $300 million in cash ?

    Neo (03e5c2)


  21. Reports also indicate the purchase price was 5 times annual revenue

    It used to be that 1 times trailing revenue was the norm, perhaps a bit higher if the target was experiencing growth in revenue (in which case the purchase multiple was rationalized as being based on anticipated revenues).

    Assuming AOL did pay 5 times revenue multiple, and guessing that HuffPo has a 15% bottom line margin, AOL is paying 33 times earnings… a pretty high multiple (Google sells for only 23 times earnings).

    The calculation of 57 cents per page view is a bit misleading. The purchase price is a one-time outlay, the page views are an annual measurement. If you want to use a three year time frame, it’s ‘merely’ 19 cents per page view. Of course, the relevant metric is how much advertising revenue AOL/HuffPo gets per user, my guess is that it is way less than even 19 cents a page.

    So why did AOL buy? Because (I’m guessing) while the purchase doesn’t make sense from a total dollars (in the pocket, out of the pocket) perspective, since the purchase price isn’t a P&L item, AOL has bought themselves some operating cash flow profits… an important goal for a management team trying to keep their jobs.

    And by the way, NOBODY understands the Internet. Some people understand part of it, nobody understands the whole thing.

    steve (369bc6)

  22. I hope the combined company is as successful as Air America!

    Dick (2a2db1)

  23. Steve, I think Tucker Carlson and Andrew Breitbart (and, to be honest, Arianna Huffington) understand how to succeed with a news website, and AOL doesn’t.

    And that Arianna sold for that much money is not an indicator that AOL now has bought understanding. Quite the contrary.

    I suppose you’re right that the goal here is to make it appear as though they have improved their company’s revenue (which was already pretty decent, and in the billions).

    I guess I don’t understand why that would help them keep their jobs. But now I’m the one speaking out of my ass.

    Dustin (b54cdc)

  24. Anything AOL touches turns to manure so Bye Bye Huffpo

    Dennis D (e0b996)

  25. The perfect crime would be to make some new version of twitter, and conspire with a few AOL board members to sell it to AOL for $10 million.

    Pocket change to these imbeciles.

    Dustin (b54cdc)

  26. Reports also indicate the purchase price was 5 times annual revenue.

    Does that mean you’re making $133,375 annually from this site?

    To really compare, take whatever you earn annually from this site times five, and yes, I challenge you to post the figure.

    Comment by Fred the Analyst — 2/7/2011 @ 9:36 am

    Yeah, I deliberately did not talk about that part. I shell our about two grand a year for hosting and rely on donations to break even.

    Which is why this post is tongue in cheek.

    Patterico (65e7df)

  27. Them – 500mm pages views a month. You – 420m a month. 1190-to-1 ratio.

    Them – $63mm in annual revenue (if 5X multiple is correct). You – $2m in annual revenue. 31,500-to-1 ratio.

    Question: why don’t advertisers think your readers are as dumb and likely to click on ads as are huffpo readers?

    steve (369bc6)

  28. Dude:
    You are so busted.
    Something about the greed of the legal class?
    (snark off)

    Carlos (b8ab92)

  29. Huffington Post: A selfish business entity making obscene profits on the backs of the poor and the downtrodden.

    BodiesOfEvil (d4485e)

  30. AOL = Watered Down.

    Corpulant (d4485e)

  31. Robin #18 – isn’t/wasn’t AOL just trying to do the Apple thingy, only not so successfully ? As in trying to make the brand the be-all and end-all for dévotées ? After all, why on Gaia would *anyone* want to do anything other than with the perfection-that-is-AOL ?

    For folk who were content in their secret garden, AOL did supply all their needs … for us computer geeks, once we knew that there were shiny things on the other side of the AOL compound walls, you could not keep us in …

    Alasdair (e7cb73)

  32. I was talking to a few late 20-somethings and mentioned HuffPo as a widely read left leaning site. Everyone laughed and mocked it as a wanna-be National Enquirer. No one in the group took it seriously.

    Dana (8ba2fb)

  33. It’s not 57 cents. It’s 63.

    Gotta update again. Jeez.

    Patterico (65e7df)

  34. What grade did you get in “Law Math”?

    Dustin (b54cdc)

  35. I was talking to a few late 20-somethings and mentioned HuffPo as a widely read left leaning site. Everyone laughed and mocked it as a wanna-be National Enquirer. No one in the group took it seriously.

    Comment by Dana — 2/7/2011 @ 5:00 pm

    That’s a surprise to hear…and encouraging actually. Was imagining it to be the go-to place for committed liberals, like Perez Hilton for gossip lovers. Ugh, did I just type that? I do not go to that person’s site (or is it sites), I hasten to add. :)

    no one you know (b66a8d)

  36. What grade did you get in “Law Math”?

    Comment by Dustin — 2/7/2011 @ 6:05 pm

    LOL

    no one you know (b66a8d)

  37. NOYK, I too was surprised especially as the group were moderates and left leaners.

    Maybe we give HuffPo too much credit.

    Dana (8ba2fb)

  38. I know this sounds bizarre, but I don’t think AOL understands the internet.

    AOL certainly doesn’t understand journalism, or even writing. Its content farm system is a hideous Leviathan with only the faintest resemblance to informing readers. It’s mostly crass SEO and an unbelievably inept process that aims to make every article and piece of content profitable.

    Brother Bradley J. Fikes, C.O.R. (fb9e90)

  39. Bradley, I’m curious if you’ve read Murdoch’s The Daily yet and what you think of it?

    Dana (8ba2fb)

  40. Hi Dana,
    No, I haven’t read The Daily, because I don’t have an iPad, and don’t feel like paying for it.

    Have you? If so, what do you think about it? Does it give you anything you can’t get anywhere else?

    Brother Bradley J. Fikes, C.O.R. (fb9e90)

  41. Patterico, you lack one skill that Ariana has. You can’t make someone become gay from being married to you.

    SPQR (26be8b)

  42. Bradley, I’ve only perused it briefly on the hub’s ipad (not a huge ipad fan myself). He has read it more closely and thinks there should be some more content – maybe AP or even some WSJ to beef it up as it’s lacking. But it’s still new and getting off the ground, so maybe they will.

    On the upside, it’s got a unique ability to showcase 360 photos which is pretty cool.

    Dana (8ba2fb)

  43. You can’t make someone become gay from being married to you.

    Now, to be completely fair, we don’t know that for sure…

    Maybe his wife is just more willing to put up with Patrick’s s**t than Ariana’s husband was. :)

    I’m kidding, Patrick.

    We both know your wife wouldn’t put up with ANY s**t. :)

    Scott Jacobs (d027b8)

  44. Eh. 360 degree photos…

    Dana (8ba2fb)

  45. So a person who already had millions in her coffers due to her last marriage suddenly needed many millions more – oh well, might as well sell when the market’s gone insane again regarding internet company valuations. Funniest thing is that, true to form, AOHell wasn’t bidding against anyone else, just themselves. Double duh once again for the company that singlehandedly ruined Time Warner. Good job!

    Dmac (c50897)


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