FM’s Signal LA event kicks off today with a dynamic duo: Aol CEO Tim Armstrong, who is joined by Arianna Huffington, who’s Huffington Post site Aol bought this week and becomes the new president & editor-in-chief of the Huffington Post Media Group within Aol.
Tim and Arianna were at the Super Bowl together, it turns out, when the deal was finalized — so there was lots of hugging, with everyone trying to figure out what’s going on, Tim tells with laughs.
John says to Tim, “this is a very big bet.” Aol spent 40% of its cash — why? Tim, three things: price, strategy & execution needed for context. Price, it’s a very reasonable deal on an earnings multiple, Mark Mahaney from Citi says so as well, Tim cites.
Strategy, people saying “another strategy” but Tim says from Day 1 he’s been saying “content, content, content.” There were 2700 articles about the deal yesterday, more than the Super Bowl, and that speaks to how disruptive the deal really is.
Most articles said AOL would be dead in 12 months but ended the spinoff year with $800 million in cash. Changed on a dime with products, got to number 4 from 11 in video, management team that knocked ball out of the park.
What you don’t see from Arianna is her entrepreneurship, her caring. She’s now sold the largest internet news company cofounded by a woman — she wouldn’t come in unless Aol’s culture had changed.
John to Arianna, this happened so quickly — you didn’t run an auction or have bidders. Why that way? Arianna, having gotten to know Tim and his vision for Aol and hers for the Huffington Post that the was a merger of visions.
When told her investors that this was what she wanted to do, and they asked about shopping it or waiting for an IPO, she said this was the best thing for the Huffington Post. This was my last act, nothing else after that, she said. Not just best price but the best ??? didn’t catch it, sorry.
How about your role, John asks. Arianna says the new media group will be all HP plus Aol content. Tim has prepared the ground to have a coherent editorial vision across all the sections [let's not mention that Engadget and TechCrunch are barely speaking, much less have a coherent editorial vision].
Patch is a phenomenon she says. Had a call with over 1,000 Patchers on what can be done to redo local citizen journalism ahead of the next elections.
Tim says integration will be great for consumers and advertisers.
John asks about sales. Almost everyone is going to Aol, Arianna says. Tim says there’s not so much overlap, Aol needed a bigger sales force, anyway. Coca Cola is going to do a 10 year committment with Huffington Post, apparently. Johnson & Johnson is doing something. Both are focused to women around the world.
John, joke about who bought whom. Arianna jokes that they were going to say it was Huff Post buying Aol if the Super Bowl had gone another way. But she says to issue of being left-wing, she’s been trying to move past left-right and more to what are the issues. Also important to be transparent as a journalist.
Tim says political thing is a red herring. Most of the Huff Post is beyond politics. But the business fact is the Huff Post is one of the fastest growing content sites.
Emails they’ve received, all the press they’re reading, it’s focused on this being wow and how disruptive. As for content factories that people talk about, “this is about brands … we’re working on brands that are going to stand the test of time on the internet.”
John, how about ad products and project “Devil” I think he said. Tim says they literally took a rule to screens at first to figure out the ad break on the page. Found 18-30% of the content was above the fold. Project Devil doesn’t use more ad space — it’s the same or less, but as a brand allows you to have one conversation on page. Project going well, rolled out across all Aol properties in Q1, lots of resigns.
Removed about 65% of ads across Aol properties, which will make revenues look bad, but difficult choice to improve the user experience. But “we’re in a comeback .. and the comeback is for the users, not the advertisers.” He won’t apologize if revenue is down because it’s the best thing int he long term.
Arianna talks jokes about a Project Angel. Time for humanizing everything, lives. Aol is going to get a napping room. Sleep is very important. She was asked why so much spent at Huffington Post on sweaters. She said it was part of a Huffington Post tradition, and it’s something Aol should do.
John: what about The Daily? Tim, told Rupert he was very impressed. Did a good job in humanizing the content. It’s a great step. If they do that, Aol does things, great for the consumer. And he thinks the plasma screen will be the most important screen going forward.
Arianna, think it’s a great beginning but odd for a internet product to be called “The Daily” because the internet is about immediacy, 24/7.
Question time from audience. What about video. Tim says infrastructure for distribution and production, as well as people, see it in three phases: production, distribution and monetization. Aol strong on production. Hard to argue they don’t have distribution. On ad space, spending a lot of time on Project Devil for video.
Arianna, says one of the things most excited about. Huff Post wanted to double-down on video but couldn’t afford it. Great to go immediately into it.
And that’s it.