The queen of the internet
As print journalism struggles on, Arianna Huffington has turned a startling profit by selling her news-aggregator website for $315m
Published 12/02/2011 | 05:00
This week's deal to sell her website, the Huffington Post, to AOL for $315m (€233m) marks the latest step in the rise and rise of Arianna Huffington, the newly crowned internet queen.
As old-style newspaper publishers everywhere struggle to find ways of making money from the internet, Arianna Huffington has shown them how to do it.
This week, AOL agreed to pay $315m ($300m in cash and $15m in shares) for the Huffington Post, the website which she founded in 2005. Huffington's slice of the proceeds has been estimated at over $100m.
Since she first burst on the media scene after graduating with an economics degree from Cambridge in the early 1970s Huffington, nee Stassinop-oulous, has generated sharply divided opinions.
Almost six feet tall and still, at over 60 years of age, strikingly beautiful, she has been variously derided as being the most upwardly mobile Greek since Icarus, an intellectual pole-dancer, a scheming puppet master and a ruthless opportunist.
She is also, as she demonstrated once again this week, one very smart lady.
Although it styles itself as an online newspaper, the Huffington Post is, in reality, more a well-packaged collection of blogs and so-called news-aggregator, which gathers material from other media sources.
The beauty of this business model is that most of the Huffington Post's content costs it nothing, with most bloggers contributing their thoughts for free and the aggregated material also coming to it gratis courtesy of the websites of traditional print newspapers.
Huffington's decision to sell out to AOL has already generated howls of protest from angry Huffington Post bloggers who feel, not entirely unreasonably, that she and her fellow-investors are profiting from their endeavours.
Will they be as keen to contribute for free in future now that Huffington is about to ride off into the sunset, her saddlebags bursting with AOL cash?
There must also be question marks over the continuing viability of news-aggregators.
With traditional newsprint revenues drying up, newspapers everywhere have been forced to re-examine ways of squeezing revenue from their online editions.
One by one, the old-style newspapers, the most recent being Rupert Murdoch's Newscorp, have been erecting paywalls and forcing browsers to pay for previously "free" content.
Further complicating matters is the fact that several major US newspapers, including the 'Washington Post', are reported to be working on their own news-aggregation site.
If the newspapers can make their internet paywalls stick, admittedly a very big "if", then it has serious implications for news-aggregators such as the Huffington Post.
All of which has led several observers to argue that AOL got a lousy deal, while Arianna Huffington pulled off an outstanding deal for herself and her investors.
The latest controversy will be like water off a duck's back to Huffington. As she has repeatedly demonstrated over the past 40 years, she doesn't so much court controversy as thrive on it.
After graduating, she wrote two well-received biographies, the first of the Greek soprano Maria Callas and the second of the Spanish artist Pablo Picasso. She also embarked a on a near-decade-long relationship with Bernard Levin, the London Times columnist who was 22 years her senior.
Their relationship ended in 1980 when the commitment-phobic Levin refused to marry her.
Soon after breaking up with Levin she moved to the United States and in 1986 she married Michael Huffington, whose family had made its fortune in the natural gas business.
A lifelong Republican, Michael Huffington was appointed deputy assistant secretary of defence for negotiations policy by President Ronald Reagan in 1986. During these years Arianna dutifully played the role of political wife and was active in Republican Party circles.
She was a prominent supporter of Newt Gingrich's 'Republican Revolution' movement and Bob Dole's unsuccessful 1996 presidential election campaign. She played the conservative foil to comedian Al Franken in the Comedy Central TV channel's coverage of the 1996 presidential election.
However, the highlight of her political involvement during these years was her husband's unsuccessful 1994 election campaign for the California senate seat held by Democrat Diane Feinstein.
After the end of Ronald Reagan's presidential term the couple, who had two daughters together, went to live in Michael Huffington's home state of California. In 1992, Huffington successfully ran for US Congress.
However, instead of defending his seat two years later he chose to challenge Feinstein for the Senate.
In what was up to then the most expensive non-presidential election campaign in US political history, Michael Huffington spent $28m, most of it his own money, on the campaign.
Unfortunately, despite Michael Huffington's monetary advantage, Feinstein proved to be doughty campaigner eventually retaining her seat with just under 47pc of the vote compared to Michael Huffington's 45pc share.
Michael and Arianna Huffington divorced in 1997 and Michael Huffington announced that he was bisexual the following year. He has since become involved in a number of gay rights organisations.
Following her divorce, Arianna Huffington moved to the political centre. In 2003, she ran as an independent in the California gubernatorial race that was won by former actor Arnold Schwarzenegger. She dropped out of the race just over a month before election day with the opinion polls showing her on just 2pc of the vote.
Never one to allow a reverse to halt her onward march, Huffington persuaded a group of wealthy investors to bankroll the Huffington Post in 2005.
The new website quickly carved out a distinctive niche in the crowed blogosphere. Despite her previous Republican Party background, the politics of the website were decidedly centrist, even liberal, as Huffington cannily exploited growing popular disenchantment at the presidency of George W Bush.
By doing so, the Huffington Post quickly overtook its more conservative rival, the Drudge Report, in popularity. Drudge, which pioneered the campaigning, news-aggregating website, had been reduced to the status of an also-ran by the end of the noughties.
Even so Huffington Post's success is very much of the relative kind. Despite having 25 million unique monthly visitors the site has annual revenue of just over $30m and only turned its first profit last year.
This means that AOL is paying the equivalent of over 10 times revenue, the vast bulk of it in cash, for the Huffington Post. Even for a business that is growing at an annual rate of 22pc, that's a very steep price.
Despite taking most of her portion of the purchase price in cash, Huffington is staying on at AOL after the takeover, becoming head and editor-in-chief of all of its web content.
This has led to speculation that she is being lined up to succeed Tim Armstrong as AOL chief executive.
It's an intriguing thought, Arianna as chief executive of one of the United States' original online giants, but it probably won't happen.
Even if the Huffington Post achieves its target of trebling sales to $100m by 2012, the growth rates needed to justify the price being paid by AOL are almost certainly not achievable. If she sticks around, Huffington will end up carrying the can for AOL's decision to over-pay for the Huffington Post.
Far more likely is that, with her net worth having been boosted by at least $100m, Huffington will quickly move on to her next venture and leave AOL to live with the consequences of its over-priced acquisition.