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@ pC2011: AOL-HuffPo Merger Will Produce $20M In ‘Synergies’ – And Layoffs

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The $315 million AOL/Huffington Post merger could close next week, said CEO Tim Armstrong, seated next to his new partner Arianna Huffington and Staci D. Kramer, editor & EVP, ContentNext/paidContent in the closing session of the paidContent 2011. Armstrong began by talking about the many firsts they’ve shared: Huffington’s first Super Bowl game (with the acquisition announced that night, she barely saw one play) and her first video conference. The merger will create about $20 million in synergies, Armstrong said, and it will also lead to some layoffs. At the same time, there’s going to more high-profile hires, such as ex-Politco/current Yahoo (NSDQ: YHOO) News journalist Michael Calderone, Huffington said.

Armstrong and Huffington didn’t discuss the number of layoffs or where they would be coming from mostly. But Armstrong did express sensitivity about handling it, noting that he recalls how being laid off affected his family when his father lost his job.

Kramer discussed the prospect of star power among the two brands. Certainly, The Huffington Post has gained huge traction in its five years, while last year, AOL tapped an agency to help revamp the brand identity from that of a declining dial-up internet service to a content and advertising company, something it’s been for six years.

So is AOL in danger of being overshadowed by the HuffPo brand? At the end of the day, which one will dominate in consumers’ minds?

“The best brand will always survive,” said Huffington.

The coverage areas between the two companies also present some interesting overlap and room for complement. For example, HuffPo has become big notable for its national reach, but it has kept its local site presence limited to a handful of cities. With that in mind, how long will AOL stick with its hyperlocal network Patch?

Armstrong answered the question with a bit of science fiction thrown into the response: “Let’s say today was your first day on planet Earth. And you’re told that there’s this thing called the internet. [If you’re considering where to start a business] local would be the first thing you would look at. About 55 percent of advertising is local. If I told you you have a top five company worth $2 billion and the ones above you are worth $20 billion and more, you would bet on this company. I do think we’re moving too slow with Patch in some ways. But I have confidence in Patch”

The issue of the unpaid bloggers has also come up time and again, especially since HuffPo was acquired by AOL (NYSE: AOL). The resentment among some HuffPo bloggers has led some unpaid contributors to call for a strike. (Full disclosure: my wife is currently a regular, unpaid contributor to HuffPo). Huffington dismissed the complaints.

“We have 143 editors and reporters who get paid market rates and above,” she said. “There are people who pay agents to get them on TV for free. People want to be a part of these shows to promote themselves, they want to be on Bill O’Reilly; they want to be on Rachel Maddow. You want to go on strike against Rachel Maddow? No one will pay attention.”

One Response to “@ pC2011: AOL-HuffPo Merger Will Produce $20M In ‘Synergies’ – And Layoffs”

  1. The “your first day on planet Earth” approach is a wrong base to develop a new AOL strategy.
    It already earned quiet a “reputation”, which is to be “fixed” first.
    It seems like they do not understand that.