America On-Line finally figured out how to pulp all those CDs and turn them into bills, because they just up and purchased the Huffington Post for $315 million.

The transaction will create a premier global, national, local, and hyper-local content group for the digital age – leveraged across online, mobile, tablet, and video platforms. The combination of AOL’s infrastructure and scale with The Huffington Post’s pioneering approach to news and innovative community building among a broad and sophisticated audience will mark a seminal moment in the evolution of digital journalism and online engagement.

The new group will have a combined base of 117 million unique visitors a month in the United States and 270 million around the world**. Following the close of this transaction, AOL will accelerate its strategy to deliver a scaled and differentiated array of premium news, analysis, and entertainment produced by thousands of writers, editors, reporters, and videographers around the globe.

As part of the transaction, Arianna Huffington, The Huffington Post’s co-founder and editor-in-chief, will be named president and editor-in-chief of The Huffington Post Media Group, which will include all Huffington Post and AOL content, including Engadget, TechCrunch, Moviefone, MapQuest, Black Voices, PopEater, AOL Music, AOL Latino, AutoBlog, Patch, StyleList, and more.

The deal includes $300 million in cash and $15 million in stock.

In a letter to its blog team, Arianna Huffington said that the deal instantly creates “one of the “biggest media companies in the world, with global, national, and local reach — combining original reporting, opinion, video, social engagement and community, and leveraged across every platform, including the web, mobile, and tablets.” She said the site would basically continue as it was, only incorporating the content built by AOL. She also discusses how the deal came together here.

I agree with Felix Salmon that this looks like a good deal for both sides. AOL was slowly losing subscribers, and while they still had a huge audience, they weren’t really driving them in any one direction. Their content business just got some uniformity and branding.

HuffPo has always derived much of its blog traffic from entertainment and gossip stories, and with the inclusion of AOL’s large audience the politics will probably become an even smaller percentage of the traffic. In that sense, HuffPo really operates the way a newspaper used to operate, with the fluff subsidizing the meat and potatoes.

I probably have a very unusual view of things, but pretty much everything I read on Huffington Post comes from their original reporting wing, and they have a growing staff in that department delivering very strong content. It’s good for progressive media in general to see a business model thriving, and while there are concerns about a general flattening of the online space that’s already happening, and this at least plants a flag on the left side. I expect them only to expand and wish them the best of luck.