AOL Drops $315 Million In Stock Value After Spending $315 Million On HuffPo

  • Share
  • Read Later

It could be an off coincidence or some kind of weird trading karma, but AOL stock has fallen $315 million in value over the last five days – Exactly the same amount that the company paid to purchase the Huffington Post in the controversial deal closed on Superbowl Sunday.

That the stock was already falling before news of the sale may have been triggered by the leak last week of an internal memo from CEO Tim Armstrong that pushed for profitability and pageviews over all other considerations, suggesting that journalistic integrity will be expected to take a backseat to business concerns as a matter of course. Concerns about the direction of AOL’s output weren’t helped with the HuffPo buyout, which placed Ariana Huffington in charge as the Editor in Chief of the newly-created Huffington Post Media Group within the company, given both her political stature and the Huffington Post’s strategy of using unpaid bloggers to provide content (A matter causing some discussion internally right now). But is that why the market is seemingly turning its back on the onetime internet giant?

Not exactly; there are also said to be concerns over the cost of the buyout – AOL was said to have paid based on the estimated profit HuffPo is projecting for 2012, as opposed to its current value – and whether AOL can successfully scale the success that the HuffPo has experienced to date. Worryingly for the company, it seems that Critical Media’s Sean Morgan sums up the prevailing feeling right now:

Now comes the hard part: actually monetizing all of that content, and profitably. Sure HuffPo is good at it, but video is where the problems begin. If monetization will be through saturating their brands with local video content [per leaked “master plan” on Business Insider last week], we’re looking at a second Time Warner moment for AOL — the company does not have the infrastructure to efficiently (read: fast and on the cheap) put out news video that will both serve the interest of their readers and make them money.

Well, unless nobody gets paid for their efforts, of course…

More On Techland:

TechFast: AOL Buys HuffPo, Motorola Tablet, Super Bowl Ads

AOL Purchases 18000-Site Strong Video Network

AOL Plans Merger With Yahoo