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Image via WikipediaIn a joint press release, Internet Services Provider America Online and The Huffington Post news and lifestyle Web site announced that AOL ("Another Outrageous Layout") has acquired the Post for $315 million, $300 million of which will be paid in cash.Arianna Huffington will front the newly created Huffington Post Media Group ("HPMG"), following the sale, which is expected to be completed sometime during the first or second quarter of 2011. The press release boasts that the new entity will reach 117 million Americans and a global audience of 270 million.
Besides the Huffington Post, which was founded in 2005, HPMG will incorporate all AOL content, including MapQuest, Moviefone and TechCrunch. By how much depends on whom you're reading, but analysts reacting to the acquisition seemed unanimous in stating that AOL overpaid for the Post. Benchmark Co. analyst Clayton Moran was quoted by Reuters as stating that AOL paid 32 times earnings before interest, taxes, depreciation and amortization for The Huffington Post, amounting to 40 percent of AOL's cash on-hand.
A Washington Post account of the transaction cites the Post's anticipated total sales in 2011 as $50 million, making AOL's purchase price more than six times the projected revenue of its new acquisition. AOL offers a large sales force to bolster the Post's earnings, but the move is seen by some as a desperate attempt by AOL to become relevant again, after being spun off from its disastrous merger with Time Warner in 2009.
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