The number of full-time journalists that Arianna Huffington now oversees is more than the newsroom staffs of the Wall Street Journal or the Washington Post. (Or the Los Angeles Times, by far.) Most, about 800, are editors on the Patch sites that Huffington got in the AOL merger. Forbes' Jeff Bercovici, who used to be one of the AOL employees, says the merger isn't looking all that smooth as a long-term play.
AOL Chairman Tim Armstrong seemed to find his ideal mate in Arianna Huffington. He needed someone to galvanize his drifting editorial division and give it a distinctive voice to woo readers and advertisers. She provided all that with The Huffington Post, one of the most successful publishing ventures of the last decade. In just six years her site became one of the world’s top ten news destinations–and profitable, to boot. Armstrong, seeing a savior, was willing to spend $315 million for it in February and to make Huffington editor-in-chief of AOL’s 1,200-person newsroom. “Arianna represents what the future will look like for social news,” Armstrong said on CNN the day the deal was announced.
But Armstrong’s big coup could also be AOL’s eventual undoing. In hitching himself to Huffington, he has signed on to a mission and an agenda that go well beyond his mandate of re-creating value for shareholders. He has also tied himself to somebody who has demonstrated that she puts her own interests ahead of those of her partners. At HuffPo she repeatedly jousted with her fellow board members, whom she saw as stifling her ambitions to build a news operation to rival the New York Times. “There was a bucking bronco whenever someone said, ‘No, you can’t do that,’” says Greg Coleman, HuffPo’s chief revenue officer at the time, who wasn’t offered a job at AOL after the deal. “I know Arianna very well,” he continues. “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.”
Consider the way she railroaded the buyout over the objections of some of her board members. When Huffington first took the deal back to her partners, a couple of them protested. “Our goal was an IPO rather than building up the company to be acquired by another media company,” says Palo Alto venture capitalist Fred Harman, whose firm, Oak Investment Partners, injected $25 million into HuffPo in 2008 at a valuation of $100 million. While Ken Lerer, Huffington’s original partner in the launch, was content to sell, Harman and Eric Hippeau, HuffPo’s CEO and the fourth member of its small board of directors, held out, believing a billion-dollar public offering was possible given the patience to wait a year or two. “Even when Tim put a preemptive offer on the table, Eric and I were still inclined to roll forward as an independent company out of the belief that The Huffington Post could continue to rapidly scale and be the dominant social news company on the Web,” Harman says. (Huffington and Armstrong both declined to be interviewed for this story.)