The Huffington Post--a mere five years old--will reap its first annual profit this year, Bloomberg reports,
as its traffic surges to more than 26 million unique monthly visitors
and its sales team aims to grow revenue from $30 million this year to
$100 million by 2012. The website has been expanding of late, launching
new sections on topics such as technology and divorce and poaching high-profile journalists like Howard Fineman from Newsweek and Peter Goodman from The New York Times.
Arianna Huffington asserts that the four million readers who
post comments to the site each month prove that people want to share
and contribute to news in addition to consuming it. Her news outlet may now be worth $300-$450 million, MediaMorph chairman
Shahid Khan tells Bloomberg, adding that the company is "too rich for a small
player to acquire" and that "the only exit options are an IPO or
acquisition by a larger media conglomerate.” Huffington, meanwhile, says she isn't
actively looking for buyers.
Industry observers are parsing the news in different ways:
for Huffington Post's News Model Is Receding, notes Bloomberg's Brett
Pulley. Ever since its inception, the site, which mixes an
increasing volume of original news and opinion with aggregated stories
from around the web, has encountered criticism from publications
unhappy with the way The Huffington Post uses their content. But the
climate may be shifting. In September, The Washington Post, The New
York Times, and Gannett, all traditional print media organizations,
invested $12 million in a news aggregation venture, while other
publishers are coming to appreciate the traffic that The Huffington
Post and similar outlets drive to their sites.
- Is The Huffington Post Really Worth $450 million? inquires Jeff Bercovici at Forbes. Bercovici learns from Khan, the Bloomberg source, that he based his valuation on the website's revenues in December 2008, when it received its third round of venture-capital funding. "At this rate," Bercovici continues, "Huffpo could surpass The New York Times Co. in valuation even before it catches up in traffic."
- The Website's Profits May Not Be Sustainable, cautions
Jonathan Berr at 24/7 Wall St. Berr explains that the company is
spending heavily and that, while it has managed to persuade writers to
contribute to the site for free, its large staff size of 200-plus
employees and expensive publishing system are keeping costs high.
He questions the valuation cited by Bloomberg and adds
that 24/7 Wall St. estimates the company's value at a more modest $150
million. Berr concludes: "For now, it's hard to imagine that Wall
Street would be interested in a Huffington Post IPO. A more likely exit
strategy is a merger or a sale to a bigger media player like Time