Verizon’s $4.4 billion acquisition of AOL may result in a spin-off of The Huffington Post which the internet portal acquired for $315 million in 2011, according to a media report and analysts interviewed by TheWrap.
According to Re/code, AOL has been in discussions to sell HuffPo to German media company Axel Springer. Private equity firms have also been in the mix. But the more compelling reason for a spin-off may be that HuffPo and other AOL content divisions like TechCrunch are not a fit for Verizon, a telecommunication giant that bought AOL for its ad technologies.
Kara Swisher of Re/code wrote, “Sources said the Huffington Post has been valued at above $1 billion in this scenario, which would either be a complete sale or, more likely, structured as a joint venture.”
One expert told TheWrap that at this point Huffington Post’s “name is probably more valuable than the actual product” to AOL.
“Sort of like an aging beauty queen–still has that sex appeal, but probably will go downhill, so it may be a good idea for them to get rid of it now,” senior analyst at Diffusion Group, Alan Wolk, told TheWrap. “The other option is for them [Verizon] to try and revive it, and say, ‘Ok this thing once had a really good name, and we’re going to try and bring it back so it is hard-hitting journalism again.’”
Wolk added the site has “kind of lost its way” but because it has a name, it still has value.
Another expert countered that Verizon might want to grow a content network for its huge distribution platform.
“I don’t really understand why they would really would want to spin [Huffington Post] out because it could be leveraged to help really grow a very powerful content network for Verizon,” digital expert and co-founder of technology advisory company Brave Ventures, Jesse Redniss, told TheWrap.
“To me it wouldn’t make sense that they would immediately abandon something like Huffington Post, which is still a very valuable asset, because in the past they haven’t been able to monetize it to its fullest extent.”
Verizon has been actively trying to get into the over-the-top (OTT) and mobile marketplaces, with recent moves like its deal with AwesomenessTV and Dreamworks TV to create two channels.
AOL CEO Tim Armstrong seemed to toe the mobile line in his statement Tuesday about the Verizon acquisition: “The deal will add scale and it will add a mobile lens to everything we do inside of our content, video and ads strategy.”
Since over half of Huffington Post’s traffic comes from mobile, it seems like Verizon and AOL — both looking to cash in on mobile advertising — would want to hold on to the website.
AOL, thought of by many as a relic of the 1990s, it is still a player in the video space, No. 3 behind YouTube and Facebook. Huffington Post has been a part of that as its live video platform, HuffPost Live, has garnered over 2 billion video viewers since it launched in 2012.
Huffington Post declined to comment to TheWrap.