The Spectacle Blog
The news that AOL paid $315 million for Huffington Post has to provoke some eyerolls. According to AOL’s own Finance Daily, HuffPo claims 25 million unique monthly visitors. This alleged fact permits every Internet operator in the world to estimate the sell-out value of their own site and, as a strictly business calculation, it’s very difficult to see how the AOL/HuffPo deal makes sense.
Think of it this way: What kind of online news operation could you run for $1 million a year? Well, if you figure your staff’s average salary somewhere in the neighborhood of $75,000 — a fat number, really — then you could have a staff of 10, plus a quarter-million bucks to spare for all other expenses, including promotion.
OK, then: What’s to stop any AOL rival from plunking down $3 million a year to launch a HuffPo competitor with a staff of 30 and an expense budget of $750,000?
The relaitve ease and cheapness with which such online operations can be launched argues against a company investing a much larger amount in any single Internet property and raises a question asked by Stephen Green of Pajamas Media: “Where did AOL come up with $315 million?”
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Raoul Ortega| 2.7.11 @ 8:55AM
Of course it's worth that much. Where else are you going to find that many psychotic commenters all in one place?
Brian In MA| 2.7.11 @ 9:09AM
So if 25,000,000 viewers per month is worth $315M, Drudgereport 800,000,000 per month must be worth about $10B? Seems about right.
Floyd Looney | 2.7.11 @ 9:44AM
AOL must be run by morons. Leftist morons at that. Maybe they expect a government stimulus grant? Did you guys know that as part of the NBC-Comcast buy the government "forced" Comcast to hire "(liberal) citizen journalism" organizations? Then there is the idea of opening up "community radio" for liberal groups across the country.
I guess AOL knows something we don't. Maybe they already have an inkling of the next government mandate to keep the media as liberal as possible?
Tim| 2.7.11 @ 10:12AM
All I can say is: congratulations, Arianna Huffington! Isn't America a great country after all? Maybe you will stop hating it now?
Tim Williams| 2.7.11 @ 10:13AM
It does look a headline from 1999, doesn't it?
I was surprised that the article says HuffPo generated $31 million in revenue last year (their first profitable year.) They forecast that number nearly doubling this year - but I guess that's what you would forecast if you're trying to sell the company...
Nunya| 2.7.11 @ 5:48PM
As a businessman, purchasing a company for $315 million that had top-line revenues one-tenth of that is absurd. Add to that, if HuffPo just turned profitable, it shows that the company is run by idiots. Actually, I'd say both companies are run by idiots at this point.
Kingofthenet| 2.7.11 @ 10:52AM
Too Bad American Spectator will NEVER be worth a fraction of that.
Jeff| 2.7.11 @ 11:23AM
smoke and mirrors ... same a FaceBook ...
5 years from now they'll both be out of business ...
Floyd Looney | 2.7.11 @ 2:19PM
I have never even been to that site as far as I know