ccording to numerous sources, while it has been negotiating its deal to sell to Verizon, AOL has also been in advanced discussions with a number of parties to spin off its flagship Huffington Post content unit.
The talks have been most serious with Axel Springer, the German media conglomerate, but a number of private equity firms have also expressed interest in the high-profile property. Sources said the Huffington Post has been valued at above $1 billion in this scenario that would either be a complete sale or, more likely, structured as a joint venture.
The move would be designed to bring more investment for growth for the Huffington Post, which AOL bought several years ago for $300 million. High content costs and the ability to monetize those assets — AOL also owns TechCrunch and a number of other content properties — has been hard for the company.
AOL’s earnings report from Q1 spells out the difference quite clearly: Its “Brand” group — which includes HuffPo and TechCrunch — grew its revenue by eight percent over the past year and posted operating income of $13 million. Meanwhile, its “Platforms” group — which specializes in automated ad sales on other publishers’ properties — grew by 21 percent but lost $10 million.
Of course, Verizon could pony up more dough for the site’s leader, Arianna Huffington, part of a alleged strategy to own more content. But sources said a spin-off was far more likely. Source said AOL’s other content properties have not been part of these talks, although there may be others interested in them.
Arianna Huffington, who now works for the phone company, is likely to support any deal in which she and her unit gets more money to grow globally. It has been aggressively expanding since it was bought by AOL, opening new sites across the world. It is set to launch four more soon, including in China.
In an interview with Re/code this morning, Armstrong didn’t address that scenario directly, although he seemed to leave the door open. “We’ve spoken to partners about content and scaling,” he said. “Obviously, we’ve seen a lot of interest in the content brands we have. So over the course of the summer, stay tuned.”
I’d take that as a yes, as Armstrong has a tendency to be cagey to the point of obfuscation. He has long denied any talks with Verizon, including when rumors of an acquisition deal surfaced earlier this year. And when I asked him directly last week after hearing those acquisition discussions were again taking place, he also denied explicitly that they were serious.
I guess not. Thus, today, Arianna Huffington and Tim Armstrong work for the phone company.
No comments all around, as you might imagine.