AOL looking to Sell says Insiders: HuffPost Buy Doomed Company

Author: Pace Lattin
Published: August 29, 2011 at 10:27 am

Only 6 months after spending a great of its remaining cash on the purchase of Huffington Post, 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.

To make things worse, TechCrunch, the mainstay of the online media and technology industry, has shrunk since its purchase by AOL from over 2M monthly visitors to less than 1M (Source: Compete.com) Michael Arrington has publically expressed displeasure with having to work for Huffington, and even gone as far to criticize AOL as “pathetic.”

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. Where most content companies are run by sleek, cost-effective staff members who get paid mainly on production, AOL still has remnants of the TimeWarner era where people were paid for resumes, not results.