Kara Swisher broke the news after the Super Bowl that AOL has purchased the Huffington Post for $315M with Arianna Huffington becoming the Editor in Chief in charge of AOL’s content properties. Techcrunch also has the internal AOL memo about the deal.
This is an interesting deal that signifies how serious AOL is about it’s strategy of focusing on content and becoming a next-generation media company. Not only does the acquisition seem smart, it seems like a relatively fair price as well.
This leaves me with a big question though, why didn’t Yahoo! buy the Huffington Post? Let’s look at some data points:
- There were rumors during the summer that Yahoo! was in some sort of acquisition talks with the Huffington Post.
- Huffington Post CEO Eric Hippeau was on the board of Yahoo!, and just stepped down a few days ago, most likely related to this deal and his new job at Lerer Ventures since he’s not joining AOL as part of the deal. Him being on the board obviously means Yahoo! was fully aware of the Huffington Post and it’s business. Did Hippeau know things about Yahoo! that made him not want to sell to them?
- Huffington Post sales head Greg Coleman was previously the sales head at Yahoo! followed very briefly by being the sales boss at AOL. When AOL CEO Tim Armstrong joined, one of his first moves was parting ways through Coleman, and he apparently won’t be joining as part of the deal either. But, Coleman was obviously still pretty familiar with Yahoo! as well.
- Arianna Huffington spoke at a Yahoo! North America all hands in the past year.
- Besides all these connections, Yahoo!’s strategy these days seems very similar to AOL in it’s focus on content and cementing itself as the leading new media company. The Yahoo! acquisition of Associated Content was a similar move to AOL growing it’s Seed.com content creation arm, and both companies have been hiring more original content creators and growing their businesses in these areas.
So why didn’t Yahoo! buy Huffington Post? Some thoughts:
- Was Huffington Post not interested in being acquired by Yahoo? Has AOL become a better destination to go work? Are Armstrong’s bold moves like buying TechCrunch make it look more forward thinking? I’d guess this may be part of it. As Keith Rabois tweeted “Interestingly, Aol has now become a substantially more attractive acquirer for startups/entrepreneurs than yahoo.”
- Was it price? This seems doubtful. Maybe back in the summer Yahoo! didn’t want to pay this much, but if they knew Huffington Post was going to AOL, couldn’t they have outbid AOL? Yahoo! has more cash, so I don’t think this is a bidding war that AOL won.
- Was it location? AOL has a larger presence in New York than Yahoo!, so the Huffington Post team may have felt more like they were in the center of the action and less likely to be orphaned than they might be my Yahoo! who is headquartered in Silicon Valley.
- Was it vision? Is Armstrong and AOL just being more clear about what they are and where they are going? I think this is probably the case as well.
- Did Yahoo! not want to buy Huffington Post? The news from the summer that Yahoo! was very interested in acquiring them makes this seem unlikely, but strategies and opinions do change. It’s tough to know from the outside if Yahoo! was still heavily interested. It’s definitely possible that Yahoo! has other plans that don’t involve major acquisitions moving forward.
The bottom line is that I think Yahoo! should have bought Huffington Post. If their strategy is to be a major content player, Huffington Post was one of the key properties in the landscape and their team has a lot of knowledge and skill in working in the new social landscape of media. A lot of that could have rubbed off on Yahoo!.