AOL's Media Woes

For the second time in as many decades AOL has embarked on an ambitious plan to turn itself into a transformative media company. With the Huffington Post acquisition fully digested, and after a surprising earnings beat, we now have some perspective on the strategy and the results are nonetheless troubling.

As Henry Blodget discussed in a recent note, AOL’s media business may be losing up to $500 million per year even after achieving economies of scale. What’s more, the wildly profitable access business that has supported its media strategy is slumping with the pervasive spread of broadband access—and won’t be coming back anytime soon.

While Subscription revenue has fallen 64 per cent over the past three years, display advertisement revenue—the best approximate measure of the media business’ health—has also dropped 18 per cent. To be fair, it has risen a bit over the past year, but not anywhere near the levels needed to put the company back on the right path again.

DON’T MISS: There Is Something Fundamentally Wrong With AOL’s Media Business>>>

    

AOL Revenues

Photo: Business Insider Intelligence


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