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June 23 (Bloomberg) -- AOL Inc., after buying the Huffington Post website this year to revive sales growth, is accelerating its expansion of local coverage to lure readers interested in campaign news ahead of the 2012 presidential election.
AOL is expanding its Washington news bureau and opening news websites in Iowa, New Hampshire and South Carolina, three states where early voting will be held. The company plans to have 33 local sites in those states by the end of July, said Howard Fineman, editorial director at The Huffington Post.
“We’ve jumped the schedule to get these online,” Fineman said in an interview, adding that the company is also discussing whether to sponsor a presidential campaign debate. “We’re talking about it, and we’re talking to potential partners.”
AOL, based in New York, bought Huffington Post for $315 million in a bid to reverse a four-year slide in revenue as its dial-up Internet business shrinks. The expansion of the Patch local news websites, which number more than 800, is one of the first major initiatives by founder Arianna Huffington since Chief Executive Officer Tim Armstrong gave her control over the company’s editorial operations.
Huffington’s election effort may help draw readers to the company’s websites, boosting online advertising, said Shahid Khan, chairman and chief strategist at MediaMorph Inc., a New York-based digital media-tracking service.
“She is polarizing, it’s going to be a polarizing election,” Khan said in an interview. “Polarizing is good for media. It creates debate and a following. Even if people don’t agree with Arianna they want to know what she says.”
Huffington Post Founding
The Huffington Post was founded in 2005 by Huffington, 60, who gained prominence supporting Republican politics and later switched to more Democratic views. She started the site as a political forum and, after traffic grew during the 2008 election, expanded into other areas including sports, business and entertainment.
Huffington said in an interview the company plans to differentiate itself in this campaign by combining AOL’s local presence with Huffington Post’s social blogging and commentary.
“Our 2012 coverage will be a unique opportunity to deploy 1000 reporters across the country and present their work on our powerful national platform -- in conjunction with our social engagement tools and innovative citizen journalism program,” she said. AOL will “move beyond ‘horse race,’ commodity news and analysis to put flesh and blood on the statistics, trends, and events.”
AOL’s local content business will be a driver for growth, Armstrong, 40, said in the interview.
“People are starting to understand that AOL is a content destination,” Armstrong said. Brand advertising, video advertising and local advertising “should have large growth over the next few years,” he said.
AOL’s revenue fell 17 percent in the first quarter to $551.4 million, as advertising sales slid 11 percent and subscription revenue tumbled 24 percent. Net income dropped 86 percent to $4.7 million.
AOL, which was spun off from Time Warner Inc. in 2009, fell 51 cents, or 2.5 percent, to $19.80 at 4:15 p.m. in New York Stock Exchange trading. The shares have lost 16 percent this year.
The election may be an opportunity for Huffington Post to raise its profile and boost AOL’s fortunes, said Rob Enderle, a San Jose, California-based consultant who follows AOL.
“Given the number of feet they’ve got on the street, they should have a significant impact,” Enderle said. “They could become the place you go to for the discussion and the debate. It could be hugely beneficial for AOL in general, because it could be a huge traffic driver.”
--With assistance from Niamh Ring in New York. Editors: Peter Elstrom, Niamh Ring
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