Is the AOL/HuffPo Honeymoon Over?

There may be trouble in the AOL/HuffPo relationship, a report by Keach Hagey at the Wall Street Journal suggests:

Arianna Huffington acknowledged Thursday that her portfolio at AOL Inc. is being scaled back to include only the Huffington Post, undoing a structure put in place when her website was acquired by AOL last year. …
The wider separation of the Huffington Post and the rest of AOL … has fueled questions about the Huffington Post’s long-term future at the company.
Ms. Huffington said Thursday that she had been approached by private-equity firms interested in buying the Huffington Post, although the overtures went nowhere. She said she had no intention of leaving. Her relationship with [AOL CEO Tim] Armstrong is fine, and “all is good,” she said.
The change in Ms. Huffington’s role comes as AOL is facing a proxy battle with activist shareholder Starboard Value LP, which has criticized Mr. Armstrong’s strategy of investing heavily in online content.

(Hat-tip: MediaGazer.) Huffington sold her site for a reported $315 million to AOL in February 2011, in a deal that gave her “control of all of AOL’s editorial content as president and editor in chief of a newly created Huffington Post Media Group,” with “oversight not only of AOL’s national, local and financial news operations,” but even such services as Mapquest. AOL’s stock dropped 36 percent in 2011, according to the Associated Press, and last month AOL reportedly raised $1 billion by selling more than 800 of its patents to Microsoft.

Given the ongoing troubles of AOL and rumblings of discontent surrounding the Huffington deal, tech blogger Mathew Ingram asks, “Does AOL need HuffPo more than HuffPo needs AOL?”

More of my own thoughts: “Arianna’s Power Scaled Back at AOL?

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