Variety, With A Broken Business Model Of Its Own, Wonders About Huffington Post's Business Model

In an article inVariety, Brian Lowry wonders about the business model of The Huffington Post.

Huffington Post — with its tendency to overreach, much like conservative counterweight the Drudge Report — raises nagging questions about what the future holds, both in terms of qualitative coverage and how it’s going to be a viable business model.

Huffington Post data (when AOL acquisition was announced in Feb, 2011: NYTimes, WSJ, GigaOm)

  • 25 million unique visitors/month (Dec, 2010)
  • 500 million pageviews/month
  • $31 million revenue in 2010, $60 million estimated revenue in 2011
  • 200 employees

At 2.5 million pageviews/employee/month, HuffPo likely wasn’t profitable when acquired. (by comparison, TVBTN does ~9 million/employee/month).  How the HuffPo business model has changed since then is anybody’s guess outside the AOL Finance department, but AOL was betting (foolishly, IMO) on growth/synergy/witchcraft.

On the other hand, I’m pretty sure that Variety’s current business model is completely broken. A month ago the entire business was acquired by Penske Media (owner of and among others) for what was seen as a fire sale price of $25 million. Even that price was generally accepted to be uneconomic without significant revenue growth and cost reductions (one story mentioned the shock worthy compensation levels for some senior Variety staffers). And unlike HuffPo, I doubt that Variety’s in any sort of growth mode, and that the purchase price was substantially based on goodwill for the name of the business alone.

Pot, meet kettle.

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