Huffington Post Poised to Make First Annual Profit

What does the website's financial health say about its success?

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The Huffington Post--a mere five years old--will reap its first annual profit this year, Bloomberg reports, as its traffic surges to more than 26 million unique monthly visitors and its sales team aims to grow revenue from $30 million this year to $100 million by 2012. The website has been expanding of late, launching new sections on topics such as technology and divorce and poaching high-profile journalists like Howard Fineman from Newsweek and Peter Goodman from The New York Times.

Founder Arianna Huffington asserts that the four million readers who post comments to the site each month prove that people want to share and contribute to news in addition to consuming it. Her news outlet may now be worth $300-$450 million, MediaMorph chairman Shahid Khan tells Bloomberg, adding that the company is "too rich for a small player to acquire" and that "the only exit options are an IPO or acquisition by a larger media conglomerate.” Huffington, meanwhile, says she isn't actively looking for buyers.

Industry observers are parsing the news in different ways:

  • Criticism for Huffington Post's News Model Is Receding, notes Bloomberg's Brett Pulley. Ever since its inception, the site, which mixes an increasing volume of original news and opinion with aggregated stories from around the web, has encountered criticism from publications unhappy with the way The Huffington Post uses their content. But the climate may be shifting. In September, The Washington Post, The New York Times, and Gannett, all traditional print media organizations, invested $12 million in a news aggregation venture, while other publishers are coming to appreciate the traffic that The Huffington Post and similar outlets drive to their sites.
  • Is The Huffington Post Really Worth $450 million? inquires Jeff Bercovici at Forbes. Bercovici learns from Khan, the Bloomberg source, that he based his valuation on the website's revenues in December 2008, when it received its third round of venture-capital funding. "At this rate," Bercovici continues, "Huffpo could surpass The New York Times Co. in valuation even before it catches up in traffic."
  • The Website's Profits May Not Be Sustainable, cautions Jonathan Berr at 24/7 Wall St. Berr explains that the company is spending heavily and that, while it has managed to persuade writers to contribute to the site for free, its large staff size of 200-plus employees and expensive publishing system are keeping costs high. He questions the valuation cited by Bloomberg and adds that 24/7 Wall St. estimates the company's value at a more modest $150 million. Berr concludes: "For now, it's hard to imagine that Wall Street would be interested in a Huffington Post IPO. A more likely exit strategy is a merger or a sale to a bigger media player like Time Warner."
This article is from the archive of our partner The Wire.