HuffPost Raises Stacks of Capital, Paving Future for News Media?
The San Francisco Chronicle reports today that The Huffington Post, the liberal news blog/web aggregator the Observer described as ‘the most powerful blog in the world’, will soon be rolling out a San Francisco edition. This comes soon after the news that the HuffPost and Greek-American founder Arianna Huffington (pictured strangling a newspaper man) raised a huge US $25 million investment from Connecticut VC firm Oak Investment Partners in its third round of VC funding. According to TechCrunch, this takes its total funding to $37 million, and suggests that the company has been valued at just under $100 million.
This, coming at a time when most news organisations are making huge cutbacks, and generally reeling from the massive decline in advertising sales, is a remarkable development and rare sign of encouragement for the Western news media. So are Oak Investment brilliant visionaries, mad, or a bit of both? Fred Harman of Oak, who is joining the board of the Huffington Post, told journalist Kara Swisher on her website D: All Things Digital that he felt the HuffPost was a rock solid bet, and was convinced that now was a better time to invest in news media than ever with bigger, more established rivals locked in a tailspin;
“The cycle of print media is accelerating downward and there are not as many companies with a balance sheet and focus to do it right online… The news market is really up for grabs in a lot of ways…and it is a good time for those who are viewed as authoritative… Who knows how deep this economic situation is going to be. But strong companies that keep investing through a bad cycle can emerge as winners.”
Harman drew parallels with his company’s investment in the Seattle-based aQuantive, the digital marketing company that owns ad industry giants Avenue A/Razorfish, Atlas Solutions, and DRIVE Performance Solutions, which survived the dot-com crash and was acquired by Microsoft in May 2007 for $6 billion.
Interestingly, the HuffPost has now changed it’s sub-title to “The Internet Newspaper,” a feisty claim considering that the 4.5 million unique visitors the HuffPost notched in September is just under a quarter of what other news organisations (including the Guardian, Times and New York Times) consistently pull in. Still, with the kind of money the HuffPost is attracting, and print display revenues in a terminal decline, newspapers around the world will surely be looking towards the HuffPost’s formula of syndicated blogs, aggregated content, and highly partisan politics and seeing which elements they can co-opt to further their own chances of survival.
Also worth noting is the newly minted HuffPost’s stated desire to expand it’s coverage to include business, eco-tech, citizen journalism initiatives, and also create a fund for (gasp) investigative journalism. Allied with their mooted establishment of mean, lean city bureaus, the HuffPost model may give the slash and burn merchants running UK newspapers some pause for thought.