AOL Has Wasted a Bundle Buying Huffington Post

AOL’s $315 million buyout of the Huffington Post has to rank as one of the most recklessly extravagant dot-com deals in history, rivaling the Time-Warner/AOL merger in stupidity if not in dollar value. Not that that would stop a few hard-core fans from blogging the deal as though it were the Second Coming.  Here’s what one of them, Jason Pollack, had to say, taking the prize for retch-inducing obsequiousness:  “The Huffington Post has been dramatically ahead of the curve in modifying their site to fit with the latest social trends. Last night they were rewarded handsomely for their brilliance.”  Yeah, sure.  Handsomely. Three-hundred-and-fifteen-million bucks! Hell, give us a measly one million and in three years we’ll build you an online presence with an audience that will rival Huffington’s in size. And unlike Huffington, which only recently began to make any money at all, we could ramp up advertising revenues relatively quickly to pay for expansion, avoiding their mistakes and stealing their best clients. The talent to do this has never been cheaper.  Having come from the newspaper business ourselves, we can attest that Pulitzer-winning reporters, some of them close personal friends, are a glut on the market. News editors we know have been looking for work for as long as seven years. And a few former managing editors have thrown in the towel. Need some celebrity-types to contribute regular think-pieces and commentary?  No problem.  Many will do it for nothing simply because, like TV actors who work for scale on Broadway, they are egomaniacs who crave the exposure. 

What does it take to attract Huffington-size audience?  In a word, sleaze.  If you haven’t visited the site recently or used Google news to find the top stories of the hour, you might still think of Huffington as the premier outlet for news, tidbits and high-minded commentary designed to appeal to political liberals. In fact, under Arianna Huffington’s sensation-mongering stewardship, they have mutated into being a purveyor of whatever it takes to attract eyeballs. As of this moment, the top Huffington story featured on Google carries the headline “Hibernating Bear Chased Off With Country Music”.  These stories are pumped out by the minute, each one calculated to make us look. And click.  If there should be even the slightest development in the Lindsay Lohan shoplifting saga, Huffington will be among the first to pick up on it and exploit it. And if search-engine interest in the troubled actress’s latest legal problem should flag for even 15 minutes, don’t be surprised if Huffington replaces it with revealing photos of Lohan flashing her beaver as she emerges from a limo. That is exactly the kind of “news” with which Huffington has built its audience.  And it is exactly what AOL is paying $315 million for, since Huffington barely exists in brick-and-mortar form, other than perhaps a few Herman Miller chairs for the handful of ad-takers and editorial employees who are calling the shots. Granted, it takes talented editors to successfully game search-engines with tabloid trash and titillating key words, and to maintain a stable of writing talent willing to work for peanuts. But are they worth $315 million?

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  • Steve February 15, 2011, 5:39 am

    Huffington Post got it’s volume of viewers by riding the coattails of Obama’s election. It held onto them by making is content more graphic and social. I quit going there when the pop up ad java scripting started commercially infecting the site with Arianna’s blessing. The format is too gaudy and pandering. I now go to Max Keiser and Zero Hedge for my ‘news’. Both BO and AH are sellouts to the master economic class. The revolution will not be televised, the net is being sacrificed, ‘kill switched’, bought out, as we blog……..

  • Mercurious February 10, 2011, 7:25 am

    This is just one of those iconic moments that sums up the zeitgeist we’re immersed in…think of it as the Mount Suribachi flag photo for the Now Generation.

    I am quite sure everyone here has noticed the ‘dumbing down’ of what once were respected–and respectable–news outlets. First broadcast television, then print, now online news. Like zombies clawing at our boarded up windows to get in and devour us, those inside are left to wonder how long before coverage of a domestic military coup is pre-empted by breathless reportage of a new Kanye West outburst.

    A million stories begging to be told about REAL life and REAL values, and instead we get T & A mixed with M & A fluff. Maybe I’ll just start chewing my own arm off and avoid the rush.

  • Steve February 10, 2011, 12:38 am

    $315 million is a rounding error.

  • David February 9, 2011, 8:16 pm

    Cam Fitzgerald–You’re so right on it hurts. Great commentary on the human condition.

    • Cam Fitzgerald February 10, 2011, 4:56 am

      To Robert and David….

      Thanks you guys. Glad you got it. Every once in awhile I go over the top and today might have been one of those days.

      Not sure why Rick puts up with me some days but he is a good sport and free speech is usually welcome on his site (and thank God for that!).

      All the best.

  • Jeff February 9, 2011, 8:06 pm

    Just a reflection of what our country has become. Not unlike all the garbage paraded out on TV…..and the dumbing down of the citizens..

  • Robert February 9, 2011, 8:06 pm

    Cam-

    I loved your post.

    Benjamin- no re-valuation is necessary, for you fell into a common trap- you demoninated all your comparisons with an intrinsicly worthless article of faith, and as the demoninator drifts toward zero, it leaves irrational dividends.

    value exists only in desire. The HuffPost story suggests that there is evidently still mass desire for the kind of sophmoric stupidity that they scramble constantly to wrap in colorful paper and dish out through an online drive-through window.

    I think the summary would simply be “sensationalism sells” – always has, always will. But in a world where substance finds only limited audience, at least the substantive of thought can share the company of their peers without fear of the “other side” actually ever winning the battle for true prosperity and wealth.

    Rick – I still have not enrolled as a paying member of Rick’sPicks, but I will, and that act should send the message that I would rather pay to hear what you have to offer than to subscribe to the HuffingtonPost and get their “content”, aka garbage, delivered for free…

    I so do not care how much AOL is willing to pay for Huff, nor do I covet the kind of energy that the Huffers have to expend in the endless game of online window dressing and trying to sensationalize the stupidity of those who seek the limelight mainly because they are too afraid of the dark that exists outside that glare.

    • Benjamin February 9, 2011, 11:23 pm

      “Benjamin- no re-valuation is necessary, for you fell into a common trap”

      Now, Robert, be honest… If AOL had instead bought 315 million to 50 billion in gold bullion, you’d be all aglow in telling people how happy you’d be to call yours some of that “mine” 🙂

      Anyway, I buy my gold with silver, and vice versa. My stash in ounces grows much better than it ever did when I just exchanged Fed paper for it. Any time the world wants to stop giving me the stuff is fine by me.

  • redwilldanaher February 9, 2011, 5:48 pm

    http://www.businessinsider.com/pictures-chinese-ghost-cities-2010-12?slop=1

    It’s off topic but it’s been a recurring mention here in Rick’s forum. More and more of this type of information is surfacing Mario. Seems like some of these places sit vacant for > 10 years. Have you researched this of late?

  • BDTR February 9, 2011, 5:45 pm

    Cognitive dissonance permeating the very nexus of critical oasis. Once found, alas, lost amid a mash of most bitter grapes. Et tu, Rick?

  • Bam_Man February 9, 2011, 5:33 pm

    Always helpful to keep in mind that they are only “Bernanke bucks”.

  • redwilldanaher February 9, 2011, 4:44 pm

    “News” sites specializing in inanity that agree to keeping “wink-winking” as if the emperor is still fully clothed are worth $315 Mil? We’re in the wrong business Rick.

  • Cam Fitzgerald February 9, 2011, 4:43 pm

    There is just a small difference between a value product and a popular product. You will know exactly what I mean when a comparison is made between the menu offerings of the local organic restaurant and the salty, sweet and fatty products of the global chain-food purveyor of plasticized meals disguised as food.

    They may be similarly priced yet we know they are miles apart in both appeal and nutritional content. Even Mom’s old fashioned simple food cannot compete with the likes of Colonel Sanders or Ronald Macdonald. She has given up trying and just orders out like the rest of us these days (I don’t actually).

    All you need to do to get rich in this internet media business Rick, is to sell-out to pop culture, short attention spans and a public weakness for drama and theatrics as opposed to analysis and the complexities of day to day life. Think fast-food.

    You will just need to get behind the fantasy a bit more. Out there, faint hopes and impossible dreams trump daily reality and there is no real competition between “Dancing with the Stars” and “Zero Hedge”. We all know who will win that competition hands-down but feel a little sick at the thought. Disgusted too.

    But who the hell needs news or reality when we have entertainment gods and flashy media clips of semi-naked stars? Who cares about the economy when all we really need is skin and vague rumours?

    The people want idols Rick, fatty burgers with no content and good looking losers who flash a little beaver from time to time to tittle our fantasy. Above all, we want the freedom to ignore the oppressive daily realities that bear down on us all like an avalanche in the Rockies on a spring Ski-Doo Weekend (Who needs maps and weather warnings anyway. All that crap is just for losers who can’t afford Satellite phones, GPS, personal locators and boatloads of friends with shovels to dig us out after the fact)

    What the Huffington Post has achieved is that it taps into our primitive self. We are still a tribal society despite numbering in the millions and it matters a great deal what Lindsay Lohan does on a Saturday night despite the fact we have never met her.

    Huffington offers a healthy mix of facts for legitimacy and a little snarl of attitude mixed with a dollup of juicy gossip. We need that.

    That is where all the flavour is found of course. The real meat is not meat at all. We want our sugars and highfat diet and we want it now dammit. Now, now.. NOW!!! That is the beauty of fast foods too is it not?

    Same as the news. Now just add in a sexy primitive drumbeat, plenty of sweat, some sexual indiscretion and hints of broken taboos and you have the bare makings of a mini-series to boot.

    Hell, you can do that Rick. Who needs content when appealing to the urges of the majority who demand idols is far more lucrative and rewarding. In that world, worshiping at the altar of personality is far more persuasive than arguing the facts for say, healthy diets or self-sacrifice or maybe even prudent business and financial practices.

    Who needs good governance and sensibilities. we have drugs that make all that stuff go away. See your doctor for details.

    We are tribal, you see. Our loyalties run along the lines of personality and appeal, not logic and reasoning. We love the high-fat, protein deficient witty jibe. Politicians have known this forever. Spin wins, and in that world, there is more currency in mocking good ideas than in developing them. Just ask John Stewart.

    That’s why open burning of coal is still ok. It is why we poison the soils with pesticides and herbicides with abandon and why the deficit can run to the trillions without anyone fearing a brick wall approaching.

    It is also why we can sell out all our critical industries to more serious hard working people overseas for peanuts without worrying about that stupid storm cloud on the horizon. Why we prefer to enjoy the fruits of the labours of poverty stricken workers more than the honourable gifts from our own personal efforts.

    So come on. Let’s all have a chuckle. No worries mates as long as Entertainment Tonight is on. We will happily join in, pounding on our drums as we greedily feast our eyes on the wicked and slick images pumped out by the smartest of media outlets.

    And then in hushed voices we will whisper obscenities in each others ears about this famous person or that, safe in knowing that they do not know us while we can, socially and as a group, permanently impact the futures of those budding stars; the icons of our imaginations, the greasy fast food for our brains.

    Huffington gets the big bucks because they understand people, understand our tribal instincts, and have learned to mix plenty of entertainment with some ugly reality without oppressing our spirits. We have too many worries already, don’t we?

    So what will it be then? A value product or a popular meal? Will we allow the discontent of a few vocal and knowledgeable (albeit negative) people to ruin our Happy Meal while we try to drown out the noise of the doom and gloom? Or will there be candycanes and lollipops with the ocassional hair and piece of lint stuck to the side?

    Thump, thump, thump. I hear the drums already.

    • Benjamin February 9, 2011, 11:48 pm

      Cameron,

      It’s funny how I can go to any media outlet, or just any person on the street, and hear the exact same elitist food snobbery as you were beating on about.

      But I recall reading how lobster was once viewed as a “junk food” of sorts, (ab)used to explain why poor people were s’damn poor, idiotic, and a pox on all things decent society. Or how the hotdog couldn’t be considered fit for consumption because of all in it, even though buffalo-hunting Indians were considered so virtuous for using the whole animal.

      There’s a zillion other examples in history because it’s nothing new.

    • Cam Fitzgerald February 10, 2011, 4:49 am

      Don’t you get sarcasm Benjamin?

    • Benjamin February 10, 2011, 7:28 am

      Cameron,

      Apologies, good sir. Though I can dish it out well enough (not to mention causicity, I suppose), detecting sarcasm in others isn’t exactly one of my strong points… these days.

      If you’ve ever seen the movie “The Thing” by Carpenter (which I did the other day lol), then you’ll recall the part where Wilford Brimley did the assimilation projection, then promptly opened up a desk draw to take out a pistol. Well, recently I’ve come to see the matter of human biology, the food chain, and the possibilities of survivability (quite surprising, really) in a whole new light.

      I guess I’m a little touchy on the subject, I mean to say. Sorry about that. I’ll keep it in mind for future reference that Cameron has a sense of sarcasm 🙂

  • cmoreoke February 9, 2011, 3:49 pm

    TOO LATE!

  • irina February 9, 2011, 3:30 pm

    Huffington Post has had and maintained a valued brand in the media for a long long time.

    In the last few years, they have been a great source of innovative content and objective and daring and accurate reporting in the e-media too.

    In a world where E-bubles are valued with full hot air at 50BILLION for what??? the valuation could even be on the very cheap side.

    I see great potential if AOL use this advantage intelligently. Marianna has proven she can deliver surprises.

    Can anyone truly value top quality content, so rare today with so much time-wasting e-garbage flying and floating around?

    Respectfully,
    I

    &&&&&&&

    My point was that with a couple of good news editors and reporters, anyone could build a Huffington-size audience for a million dollars or less. RA

    • Carol February 9, 2011, 8:07 pm

      HuffPo used to be a decent read but the sleaze factor did, indeed, get to be too much. What Arianna has managed to do is follow Rupert’s trail into sleaze to build up an audience which means that she’s managed to multiply Rupert’s Page Six trash. But really, when you get right down to it, there’s hardly anything worth reading anymore from newspapers (NYT’s editorial stable is suspiciously right wing) to mags. Even the New Yorker ain’t what it used to be and I suspect that’s Tina Brown’s doing.

      As for Arianna’s cred as a liberal, not too long ago she was a right winger. Now she’s just a full spectrum sell-out, more beholden to big bucks than any particular party. And if she can get more and more exposure on CNBC (tout TV) along with everything else, well, “it’s all good” as they say. Ah, careerism.

  • Benjamin February 9, 2011, 6:40 am

    Entire gold supply =~ $4 trillion =~ 80 Facebooks =~ 12,700 Huffington Posts

    Time for a major revaluation, lest all sanity become permanently obliterated.

  • John Jay February 9, 2011, 5:25 am

    AOL buys Huffington Post.
    Just the last faint echo from the old dotcom boom!
    Compared to the MBS/TARP scheme that GS/JPM et al pulled off, the dotcom era all seems rather quaint and provincial.
    315 million is probably a couple of days profit from the HFT operations of todays “Players”
    Maybe AOL can look up Ted Turner to make it all happen!

  • mario cavolo February 9, 2011, 4:47 am

    About 1 year ago a good friend mentioned Huff Post to me as a suggested news/info source and I subscribed to the various daily then weekly feeds….over the months I played less and less attention as exactly as you said I found more newsless, worthless trash info on the site and finally just stopped going there…meanwhile Martin does make it seems like a bargain compared to the Face book “valuation”…the world of those who “have” money vs. the normal world of those who have far less is indeed wildly distorted while those in charge know how to brainwash and feed the minds of the sheep…

    Cheers, Mario

  • jon February 9, 2011, 3:33 am

    The Aol Time Warner Merger was the TOP in 2000, any other questions?

  • Martin Snell February 9, 2011, 3:21 am

    “they have mutated into being a purveyor of whatever it takes to attract eyeballs”

    Sounds like “good business” to me.

    As for valuation I’ll take Huff Post at $315 million over Facebook at $50 billion.

    All valuations right now are NUTS (see stock market on any recent day). That’s what happens when too much free money is getting tossed around.

  • Michael Schurr February 9, 2011, 2:26 am

    Is AOL’s purchase of Huffington anymore ridulous than the Time Warner Merger? Come On, the investment bankers didn’t even need to pump the finest hydroponic insense into the conference room when they sold this deal to managment. Does the word Dolt come to mind?

  • Terry S February 9, 2011, 2:16 am

    Hello Rick- I did not know HP’s work in scrunched form! Thanks for your tout on silver. Just one question: Do you think we’ll see 31.50 within 30 days?