Inc.’s $315 million acquisition of online news website Huffington Post boils
down to a wager that free, ad-supported online news content can become a
substantial profit driver for a large media company.
The Internet company, spun off from
Inc. in 2009, is now asking investors to look past its short-term financial
suffering while it restructures and makes acquisitions, staking its future on becoming
a digital content company and a one-stop shop for major brand advertisers
looking to shift their spending online.
AOL’s deal for Huffington Post puts
Arianna Huffington, in charge of integrating the new media venture she founded
with AOL’s patchwork of sites, like the technology blogs TechCrunch and
Engadget and the Patch local news sites.
Ms. Huffington, a prolific and
outspoken political commentator, has also been a critic of the recent scramble
by traditional publishers to find subscription business models.
charges for full access to The Wall Street Journal and charges for its new
tablet-computer newspaper, The Daily. New York
Times Co., meanwhile, plans to begin experimenting with a pay wall
for its flagship paper.
“Free content is not without
problems, but its here to stay, and publishers need to come to terms with that
and figure out how to make it work for them,” Huffington said in a speech
at a journalism conference in late 2009 hosted by the Federal Trade Commission.
She clashed over her business
approach at that event with News Corp. Chief Executive Rupert
Murdoch, who is also an ideological rival to Ms. Huffington.
Mr. Murdoch said the survival of
high-quality journalism requires that consumers pay for news online and accused
news aggregation sites, like Huffington Post, of acting like
“parasites” by linking to and getting revenue from stories published
by other outlets.
Ms. Huffington defended her site
against that charge, noting that news aggregation is legal and that it drives
large amounts of traffic to the sites of News Corp. and other publishers. She
also said news aggregation is “part of the web’s DNA.”