As analysts digest AOL's surprise $315 million purchase of The Huffington Post, they are collectively reconsidering the initial "win-win" verdict. AOL's stock has dropped since the announcement, and at least one prominent AOL blogger, conservative Matt Lewis, jumped ship, warning that "AOL has vastly underestimated the public perception" that HuffPo is an "overtly left-of-center (sometimes activist) outlet." Did AOL make a big mistake? (Watch an AP report about the deal)
The math just doesn't add up: AOL's purchase of The Huffington Post is "not necessarily the train wreck that AOL/Time Warner was," says Megan McArdle in The Atlantic. But the odds are that the only real winners will be HuffPo investors. Mergers are expensive, and in this case combining the two companies seems riskier and less valuable than a simpler, cheaper content-sharing partnership would have been.
"Huffington Post and AOL: Dazzling deal, or doomed distraction?"
The merger could work if AOL changes: Merger-wise, "the AOL track record has been horrible!" says Adam Hartung in Forbes. But if AOL abandons its usual tendency to smother its acquisitions under layers of "professional management," and instead lets Arianna Huffington take the driver's seat, both companies could thrive. After all, Huffington Post is "winning in the marketplace," while AOL's legacy business model is "rubbish."
"Can AOL resurrect with HuffPo acquisition?"
HuffPo's magic will wear off: The Huffington Post's business model is anchored in the dark art of drawing traffic through search engine optimization, but it "won't be able to fool the computers forever," says Farhad Manjoo in Slate. Google will find a way to stop rewarding sites for senselessly repeating strings of keywords to boost visibility, and thus readership. "I'm not predicting the death of AOL-HuffPo," but if they don't adapt, they're in for a rough landing.
"HuffPo's Achilles' heel"