The Great Debate UK
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Robert Cyran
Reversing fading Internet brands is difficult -- especially if it isn't clear what a company stands for. Take AOL's $315 million purchase of The Huffington Post. With this, AOL still looks like a patchwork of seemingly unrelated media sites compared to Yahoo's centralized uni-brand approach. Yet both may not succeed in equal fashion.
AOL's access business still accounts for more than 40 percent of sales and a bigger chunk of profits. Yet these sales fell 26 percent in 2010. So the company is acquiring content companies in a hurry, hoping ad revenue will fill the breach.
Now it's adding the well-known left-leaning news and entertainment site to AOL's mix of everything from hyper-local news to technology blogs. And founder Arianna Huffington will oversee all of AOL's editorial operations. HuffPo is growing fast and just profitable -- it had $31 million in revenue last year and should turn more than $50 million this year. Moreover, AOL has far more Internet traffic. If it can send some of this to HuffPo -- and vice versa -- the combined caboodle should be able to reap more advertising dollars. AOL also said it can cut $20 million of HuffPo's costs.
Eighteen months ago, Yahoo walked away from Microsoft's nearly $45 billion acquisition offer -- a 60 percent premium to Yahoo's then market value.
Some tech links to start the week:
I am seriously considering changing my byline to Zing, what with all the media attention a certain search engine is getting.
The New York Times looks at the ups and downs of turning brands into verbs. The jumping off point is Bing, Microsoft's effort at verbal one-upsmanship over Google, Twitter and over generic daily activities. The software giant must alter deeply ingrained computer habits to succeed. In the meantime, my original questions about Bing remain.