AOL invested millions into TV studios to broadcast HuffPost Live
Shockingly a left-wing business is better at
1. Taking money
2. Spreading lies
than it is at...
3. Making money
Who could have ever seen this coming? Also who could have ever expected that AOL would make a bad business decision?
The Huffington Post was sold for $315 million nearly three years ago. With AOL's backing - it has injected tens of millions of dollars into the website.
Its audience has more than tripled from 25 million people before the AOL deal to 84 million at the end of October, according to comScore data. It has branched out to cover lifestyle, entertainment, business and technology, mushrooming to 60 vertical sites from about 20.
And what have AOL stockholders gotten in exchange for all that besides a top 10 list of the most racist tweets by Olympians ever?
But The Huffington Post has yet to turn a profit for AOL, falling far short of Armstrong's projection at the time of the acquisition that the unit would post $66 million in operating profit in 2013 on $165 million in revenue.
The Brand Group, which includes The Huffington Post, TechCrunch, Moviefone and Patch, reported an adjusted operating income before depreciation and amortization (OIBDA) of $4.6 million for the nine months ending in September. For the same period in 2012, it reported a loss of $41.6 million.
AOL does not break out results for the individual sites. Mark May, an analyst with CitiGroup Research, forecast The Huffington Post will post a loss of about $6 million this year on $100 million in revenue.
AOL has also invested millions of dollars to install professional TV studios to broadcast HuffPost Live, an effort described as the first cable channel on the Web. It combines real-time shows with audience feedback through online comments. Programming runs the spectrum from an interview with U.S. Secretary of Health and Human Services Kathleen Sebelius to "Sexercise 101."
That's what AOL stockholders got. Lost money and an interview with Sebelius. Meanwhile AOL has a higher net loss than the rest of the Brand Group so that websites like TechCrunch are actually subsidizing Arianna's left-wing mouthpiece.
But wait... there's a strategy.
AOL executives are betting on international sales to increase profits at The Huffington Post next year. AOL bankrolled the site's expansion in France, Japan and northwest Africa, and it plans to be in Brazil, India and other countries that collectively generate almost 50 percent of the world's gross domestic product (GDP) by the end of 2014.
HuffPo is losing money in America where people actually read it. So it's going to recoup the money by expanding into countries where people have never heard of it.
"Huffington Post has come to the point where it's a non-replicable asset," Armstrong, 42, said. "It would take a lot of effort and a lot of money and lot of years to repeat what we have been able to build with them."
BuzzFeed did it in a short amount of time. It's not that hard to copy a site consisting of left-wing screeds, pop culture and cat photos.