AOL Starting to Regret Buying HuffPo?

June 8th, 2011 11:55 AM

Media critics, decidedly un-conservative for the most part, are piling on Arianna-OL in the wake of  what is increasingly being seen as a disastrous merger. Don't blame the right, this is coming from Poynter, MediaBistro, Business Insider and elsewhere, Forbes being perhaps the only "conservative" outlet.

Four months ago, when AOL chairman Tim Armstrong needed something to revitalize his news department, he found what he thought was his savior in the Huffington Post. The popular news site already had three things that AOL hadn’t been able to previously accomplish: a clear editorial voice, continued and growing traffic growth, and deep engagement from its users. Although AOL had executed a series of bad mergers and new product launches in recent years, Armstrong pushed forward, forking over $300 million dollars into the coffers of the far left Arianna Huffington and her initial investors.

Huffington immediately became editor-in-chief of his 1,300-person newsroom. Armstrong’s merger with the Huffington Post, though, might be the end of AOL.

From the beginning, Armstrong submitted to Huffington’s every whim. She has been on a hiring binge for months, paying extravagant salaries to former New York Times, USA Today, and Forbes columnists. She laid off a number of highly qualified AOL writers to replace them with her own. She has entirely re-done the newsroom, even building a “nap room” into the office.

Huffington, who has been described as headstrong, “force of nature,” is also not one to make compromises to please others. Forbes’s Jeff Bercovici describes her as “somebody who has demonstrated that she puts her own interests ahead of those of her partners.” She even overrode her board members to accept the AOL deal.

It’s also become apparent that the left-wing Zsa Zsa Gabor unintentional impressionist isn’t quite up to snuff when it comes to managing such a large staff. Her former chief revenue officer, Greg Coleman, says “Arianna’s a world-class politician, a world-class media maven, and a genius at PR, but she’s not an experienced manager.”

Coleman also explains how Huffington refuses to be managed herself:

She wanted three things: a big bag of gold, a big fat contract, which she deserved, and...unilateral decision making over her world. And that is where you’re going to have some problems. Arianna hates to be managed.

According to Business Insider, the some of the top reasons the deal is doomed:

It is the Peter Principle on a grand scale.  None of AOL’s senior editors (Huffington, Roy Sekoff, and Nico Pitney) have ever managed more than a few people.  Now they have hundreds and lack the experience to manage a team this big.  Behind the scenes, long time Huffposters say that Jai Singh’s departure has eliminated the key adult in the room.  Now they need to grow HuffPost and save AOL – not possible

Dissension in edit.  The editorial team is miserable and views Arianna as unpredictable and her leadership unsteady.  Several editors are racing to close book deals to be write the “Devil Wears Prada” of the digital age.  Others are aggressively pitching unflattering profiles to New York Magazine, Vanity Fair, and the LA Times.   The lack of maturity and loyalty among editors is stunning – even those close to her are extremely negative behind her back – which is surprising because she has done a great job taking care of her people. [...]

Traffic is down.  The integration is likely destroying the Huffington Post.  The sales demands and content over-reach are destroying huffpost’s focus while the org is trapped trying to save AOL when the huffpost team should be focused on building huffpost.  Traffic on huffpost is up – but only due to the redirects from aol sites…. Net net, aol plus huff post traffic is in decline and the situation is not improving.

Imperial over-reach.  AOL will eliminate Popeater and Parentdish this month and roll them into the Huffington Post.  Arianna’s people are plotting to eliminate all non websites and redirect all traffic to the  No one thinks consolidating to is a good idea from a consumer or an advertiser perspective, but no one will stop Arianna.

Fear and paranoia.  Large parts of the org recognize the strategy is bad for the business but everyone is afraid to speak out.   Arianna is rumored to have created an enemies list across the company and has directed her loyalists to collect dossiers on other managers across the company and report back on conversations.  Her list includes several key business, sales, technology, and marketing executives she wants to eliminate and replace with her people.  Anyone who disagrees, even if backed by data and clear rationale’s – goes on the enemies list.  Facts don’t matter.

Nepotism.  Huffington is also quietly positioning several of her senior folks, in particular, Chris Davis, to take over the business, marketing, and distribution functions of the Huffington Post Media Group, do away with the business edit split, and eliminate COO John Brod.   Davis, like the rest of the team, has never managed a business of this size or complexity.

Unless revenue starts to grow, Armstrong might finally have to stand up for shareholders instead of Huffington’s egomania. If this happens, Huffington will probably leave, and Armstrong will be back to square one, minus $300 million and change.