Brands

AOL Dissent Shines Light on Troubled Content Approach

Sometimes, a good content strategy can save a company. Other times a questionable content approach can bring a company down.

The events at this week’s AOL annual meeting in Boston were awfully close to the later.

Jeffrey Smith — manager of the Starboard Value hedge fund, which owns more than 5 percent of the company’s outstanding stock — tried to oust CEO Tim Armstrong and several board members.

The coup d’etat was unsuccessful, but the message was clear: AOL’s content strategy over the past couple years is flawed.

Expensive moves to brand the company as an online content leader – buying the Huffington Post for $315 million and launching a massive series of local news websites across the nation under the Patch name – have made the company vulnerable to its shareholders on Wall Street, who are technically the true owners of the corporation.

After the meeting Thursday meeting, AOL’s stock price plunged, closing more than 5 percent down on a day where the broader market had an impressive rally.

Armstrong spun the situation the best that he could.

“The shareholder vote was a very clear indication the value of the company will be larger in the future than it is today,” he said.

But to call the decision to keep him in charge a vote of confidence in his overall content strategy isn’t possible when the main thing shareholders are doing with confidence is dumping their shares.

At this point, the leaders of AOL hardly have a mandate.

The problem with the brand’s content approach isn’t the liberal leanings of the Huffington Post or the lack of a national audience with the Patch sites. It’s that they don’t make enough money – plain and simple.

Earnings are what investors like Smith care about most, so when the Patch brand accumulated a $100 million loss in 2011, it was time, in their view, for a new content mission.

As the company of the yellow running man tries to move forward, all eyes will be on its content – and, of course, its bottom line.

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