AOL (NYSE: AOL) organized a hasty after-market call to announce three content deals designed to buttress its push towards premium content. The most prominent involves a content sharing arrangement with The Sporting News. CEO Tim Armstrong, taking the lead on the call, noted that AOL’s sports blog FanHouse will remain and not be replaced by Sporting News’ coverage. However, he did say that some FanHouse and Sporting News staffers might be affected, though he didn’t initially go into details. Aside sports, AOL will also be largely farming out health content to Everyday Health, and it will collaborate with real estate data site Move.com on news and ads related to the housing market.
During the Q&A session following Armstrong’s intro, our Staci D. Kramer asked what the cost savings would be and how many jobs might be affected. Armstrong said that a “couple dozen” jobs on the high end might be lost at FanHouse. He did not divulge how much the company would save by aggregating this outside content. He later added that there was no decision yet on job cuts at FanHouse. “It could be none,” he said. “It’s safe to say I don’t know yet.”
In terms of what the changes users will see, AOL Health will now be branded as “Everyday Health” on the site. And though Armstrong repeatedly emphasized that FanHouse the brand will remain, it will be folded into a Sporting News channel. AOL Real Estate will be co-branded with Move.
The decision comes a week after AOL dissolved its women’s site Lemondrop into MyDaily.com and would begin winding down its male counterpart, Asylum. “There will not be a vast reduction of sites” in the AOL network, Armstrong added.
The decision to turn to outside sources of content, after spending years of hiring hundreds of writers and editors in-house, reflects a need to get the costs of producing so much content with the reality of what advertising can support. In past years, this was not such a big deal, as AOL relied heavily on the traffic and revenues coming off its original internet access business. More recently, those traffic numbers and dollars have dwindled. So AOL has set itself on evolving its content model. The latest heading for that strategy is the “Towns” model, which involves organizing groups of sites and their staffs into distinct areas, or “Towns,” such as “Sports Town” of “Finance Town.”
One of the reasons that sports is being outsourced has to do with the sense that AOL had no endemic ad sales for that vertical, Armstrong said, though he was at pains to reiterate several times that the Fanhouse brand will not be disappearing. That said, it will be folded into The Sporting News, which is much more widely known brand, despite the growth that Fanhouse has had.
“The strategy hasn’t changed,” Armstrong said repeatedly for emphasis. “It allows us to continue to invest in more content brands. You’re going to see focus on more content brands and invest in more content brands. We’re going to be working on staffing Sporting News. The Fanhouse brand is not going away, even though we have a partner doing the heavy lifting.”
The way Armstrong positioned it, it makes sense for a company that’s been promising premium content to actually deliver it from established outlets like The Sporting News, which has been around for over a century, and Everyday Health, which on its own claims 27 million monthly uniques. Plus, having the respective dedicated ad sales teams sharing the ad revenue, starting in April, are also intended to make good on Armstrong’s vow to turn AOL’s negative display ad sales results to the positive side by the middle of next year.