Huffington Post to Turn First Annual Profit, Targets Threefold Sales Gain

The Huffington Post, the news site that began in 2005, will post its first annual profit this year and aims to keep sales rising as it turns readers into pundits, founder Arianna Huffington said in an interview.

The site has grown to more than 26 million unique monthly visitors since being started by Huffington, a Greek-born, Cambridge-educated author. Almost 4 million of them weigh in with their own views and reactions to news stories each month.

“People don’t want just to consume news,” Huffington, 60, said in an interview at her New York City headquarters. “They want to share it, they want to advance it, and add to it.”

The Huffington Post aims to more than triple its sales to $100 million in 2012 from $30 million this year, according to a person close to the company who declined to be identified. The site is benefiting as newspapers and magazines lose readers and advertisers to the more interactive experience of Web services.

“We’re profitable despite the fact we’re investing a lot in growing,” Huffington said, declining to comment on revenue. She also said the venture-capital-funded company isn’t rushing to be bought, even as potential buyers have expressed interest.

Each day, the Huffington Post aggregates about 300 stories from other publications, publishes a similar number of original stories and about the same number of original blog posts, according to Mario Ruiz, a spokesman. It has 97 full-time editorial staffers and 203 employees in total.

The site trails the New York Times, which had 34.6 million Web visitors last month, while beating online-only rivals the Daily Beast and the Drudge Report, which had 3.7 million and 1.7 million visitors, respectively, according to ComScore Inc.

Criticism Diminishing

Respect for the news aggregation model is growing after first being derided by traditional print media, said Huffington, the site’s editor-in-chief. "The view is changing," she said.

In September, three newspaper companies, Washington Post Co., New York Times Co. and Gannett Co. began working on their own aggregation venture. The companies have invested $12 million in Ongo Inc., a Silicon Valley startup that’s building a service that will aggregate news and allow readers to share stories.

Some other publishers look to the Huffington Post to benefit from aggregation. Gary Pruitt, Chief Executive Officer of McClatchy Co., said he likes the traffic that the Huffington Post and others send to his company’s websites. He said the publisher of Miami Herald doesn’t plan to become an aggregator.

Huffington said her site has “strict ground rules” for aggregating and linking back to the respective news website. “That’s why we get tons of requests every day from newspapers and other sites, asking us to link to their work,” she said.

Original content, which includes items from guest bloggers such as politicians and executives, is increasing, she said.

Social ‘Understanding’

As an example of how social news work, a Dec. 8 blog about Sarah Palin written for the Huffington Post by screenwriter Aaron Sorkin has been viewed by at least 708,849 people, shared with others 24,243 times, and generated 7,731 comments.

“They understand how users find interesting news stories based on what their friends are reading,” Sheryl Sandberg, Facebook Inc.’s chief operating officer, said in an interview. “They have a really good understanding of how social functionality can enhance the news experience.”

In a loft-style newsroom in New York’s Soho district, the Huffington Post staff manages the site’s coverage sections. Huffington, a veteran commentator who rose to prominence supporting conservative politics and then switched to more liberal views, started the site as a political forum. As her traffic grew through the 2008 election, she expanded to sports, business, entertainment, travel, and areas such as divorce.

Worth $450 Million?

The company’s revenue comes from advertising sales and event sponsorship, Huffington said. The company has no plans to charge access fees and no interest in expanding to print publishing. A similar site, the Daily Beast, owned by IAC/InterActiveCorp, merged with Newsweek magazine last month.

Much of the Huffington Post’s sales growth will come from “social marketing,” a form of advertising that lets marketers engage directly with consumers of social news, CEO Eric Hippeau said in an interview. He said the company had a profit last quarter and will be profitable for the full year.

“With such positive momentum, HuffPo can stay its course and grow organically or it can merge with or acquire someone,” said Shahid Khan, chairman and chief strategist at MediaMorph Inc., a New York-based digital media-tracking service. “Its current valuation is in the $300 million to $450 million range, which makes it too rich for a small player to acquire. This means that the only exit options are an IPO or acquisition by a larger media conglomerate.”

The company has raised about $35 million, and most of the last round of $25 million, led by Oak Investment Partners, is in the bank, according to Huffington. She said she and the co- founder of the company, New York-based angel investor Ken Lerer, together raised an initial $2 million. The company declined to say how much of its equity is controlled by Huffington.

Huffington said that even though suitors are calling, investors aren’t pressing the company to sell.

“It’s working. Everybody’s happy with how it’s going,” she said. “Nobody is in a hurry to cash out.”

To contact the reporter on this story: Brett Pulley in New York at bpulley@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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