Tim Armstrong, Chairman and CEO of AOL, talks at a media summit, Thursday, March 10, 2011 in New York.
The Huffington Post generates "hundreds of millions" of dollars in annual revenue, AOL CEO Tim Armstrong said on Wednesday at the Business Insider Ignition conference.
BI editor-in-chief Henry Blodget floated the figure of $200 million, which Armstrong did not dispute. That number would be impressive since AOL bought the news website in 2011 for $350 million. AOL declined to further elaborate on the site's revenue.
These numbers are particularly interesting in light of recent fundraising rounds by digital media startups that have led to rising valuations. The valuations have, in turn, led to some conjecture that the media startup scene is in danger of becoming overheated.
Numerous media upstarts have each raised tens of millions of dollars in 2014, resulting in outsized valuations. The updated HuffPo revenue numbers provide a bit of a lens through which to look at the newer media enterprises.
Vox is estimated to have made around $30 million in 2013. BuzzFeed has brought in more than $100 million in 2014 so far, according to a memo from CEO Jonah Peretti. The New York Times reported that Vice was on track to make $500 million.
There are many ways to value companies. Multiplying revenue is one of the most basic. The chart, below, is not perfect (it is filled with numbers that are estimates), but gives an idea of how different media companies at different stages are valued. The Huffington Post's estimate is by far the most off, since its revenue is from 2014 and its valuation is from 2011. However, it could conceivably be worth closer to $1 billion if valued similarly to Vice.
The multiples of Vox, Vice and BuzzFeed are all in about the same ballpark. At the time of AOL's acquisition, HuffPo was expected to bring in $60 million, putting the site's multiple at five — much closer to the others. Time Inc. is a far more mature business that also carries a massive chunk of debt after its spinoff from Time Warner.
It is worth noting that revenue does not necessarily mean profitability. AOL has been looking for HuffPo to turn a profit in 2014. Vox will reportedly be close to breaking even.
HuffPo's struggle to profitability points to a big reason why people have questioned the valuations given to other startups: Media is expensive to produce. The site currently has around 800 staff worldwide. BuzzFeedreportedly has more than 700 employees.
Tags: AOL, BUSINESS, DIGITAL MEDIA, MEDIA