Watch stocks you care about
The single, easiest way to keep track of all the stocks that matter...
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
Arianna Huffington is coming to the rescue of AOL (NYSE: AOL ) .
The struggling dot-com giant is acquiring The Huffington Post, tapping its charismatic namesake leader as its new content chief. The largely cash $315 million deal lands AOL a magnetic political website that attracts roughly 25 million unique visitors every month.
It's a gutsier move than you probably think. The Huffington Post's commentary leans primarily to the left. Arianna Huffington is a rock star among liberals, logging regular appearances on Comedy Central's The Colbert Report. She assisted The Daily Show in its rally against the Tea Party last year. Taking sides when it comes to politics can be as lucrative as it is incendiary. The site's columns generate 4 million reader comments a month. However, taking sides also means potentially alienating roughly half of your audience.
How many of AOL's nearly 3.9 million access subscribers will resent The Huffington Post's editor overseeing the site's content? The average tenure of the access provider's customer is more than nine years now. In other words, they're not exactly open to change. They likely skew older than the typical Internet user, too. If you had to guess political affiliations of AOL users, where would your money be? AOL's been shaking off premium subscribers for years, but this still represents 40% of the company's revenue.
The same argument can be raised for AOL's ad-supported properties, but likely to a more beneficial end. Taking a stand will shoo away right-leaning visitors, but also create greater loyalty for those sticking around.
It's a gamble, but AOL had to do this. Advertising revenue took a shocking 29% dive in its latest quarter. It was losing traffic and advertisers anyway. Breathing new life into AOL's content division -- regardless of whether it was coming from the left or right -- at least gives it a fighting chance.
Landing a content chief that also happens to be famous is just gravy. This doesn't feel all that different than the recent decision by the stodgy Newsweek to merge with IAC's (Nasdaq: IACI ) The Daily Beast, with the latter's Tina Brown taking over as editor-in-chief.
The purchase also seems to cut against the recent push at AOL to beef up content at lower price points. The Huffington Post isn't a site where faceless freelancers work for peanuts, even though many contributors are more than happy to scribe for free.
Yahoo! (Nasdaq: YHOO ) was rumored to be making a play for Huffington's company last year, around the same time that the portal scooped up Associated Content. BoomTown's Kara Swisher also reports that General Electric (NYSE: GE ) was wooing the site for NBC Universal before officially handing off the media giant to Comcast (Nasdaq: CMCSK ) .
In short, The Huffington Post didn't suffer from a lack of gentleman callers on its porch.
Along with TechCrunch -- arguably the most opinionated of the upper-tier tech blogs -- AOL is gobbling up content sites that aren't afraid to brandish some personality. I like the strategy. It makes it that much harder to call AOL a content mill. Last month's scorching hot IPO for Demand Media (NYSE: DMD ) and the polarizing nature of The Huffington Post may not make this an immediately popular move, but it could be the kick-start that AOL's been waiting for since Tim Armstrong came over.
Do you think acquiring The Huffington Post is a smart or dumb move? Share your thoughts in the comment box below.