Does Arianna Huffington’s Departure Spell Trouble for Verizon’s AOL?

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August 11, 2016 9:57am NYSE:VZ

verizon-logoAOL and its parent company, Verizon Communications Inc. (NYSE:VZ), are losing a top executive soon, with Huffington Post founder Arianna Huffington set to step down over the next few weeks.


The move ends many months of speculation over Huffington’s future, which was under scrutiny ever since AOL’s acquisition by Verizon last year. Verizon has been on a spending spree lately, acquiring major media properties AOL and Yahoo in consecutive years.

The company is intent on diversifying itself away from its traditional telecom business, which many believe has topped with the U.S. mobile market completely saturated.

Huffington will be leaving to focus on her new health and wellness startup venture, dubbed Thrive Global.

From the Wall Street Journal:

Ms. Huffington, who is 66 years old, had signed a new deal in June of last year to remain at the Huffington Post as president and editor-in-chief through 2019. But she said the contract allowed her to launch the new company, Thrive Global, while continuing in her role at the site.

When she secured Series A funding for the new venture late last week, she said it had become clear she could no longer continue running the Huffington Post.

“I really thought I could do both, but as we started building it up, I realized that it really needed my full attention,” she said in an interview. “It is important to know when one door closes and another opens and I felt that moment had arrived.”

Huffington had enjoyed a bit of a cult of personality at the Huffington Post, with many workers remaining fervently loyal despite AOL’s $315 million takeover in 2011. Once AOL became part of Verizon last year, however, things began to change.

For its part, AOL says that it’ll be business as usual at HuffPo:

“Arianna is a visionary who built The Huffington Post into a truly transformative news platform,” Tim Armstrong, chief executive officer of AOL, said in a statement. “AOL and Verizon are committed to continuing its growth and the groundbreaking work Arianna pioneered.”

That’s hard to imagine, however, given Huffington’s status in the media world. One can envision many of her top workers potentially leaving as well, to join her in her new venture-backed company.

With plenty of money in her coffers, Huffington is once again a force to be reckoned with — and that could be bad news for Verizon’s AOL.

For now, investors don’t seem worried about her departure. Verizon shares rose +0.05 (0.09%) to $53.86 in Thursday morning trading. Year-to-date, VZ has gained 16.57%, versus a much small 7% rise in the benchmark S&P 500 index.

VZ-2016-08-11


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