Google exec in for Falco as AOL reboots

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Time Warner has decided to rely on a Web pro instead of a TV veteran to help it decide the future of its AOL unit, naming experienced Google executive Tim Armstrong to run AOL as chairman and CEO.

Armstrong replaces Randy Falco, who was brought in from NBC in November 2006 and whose contract at AOL wasn't up yet.

Observers on Thursday took the appointment of Internet veteran Armstrong as a sign that the experiment with Falco, who never managed to light up AOL with the magic of his Madison Avenue connections, has failed.

The reshuffle also could be a sign that TW won't sell AOL outright. Instead, the company seems likely to spin it off and leave it in the hands of a Web professional. Hanging on to it or finding a merger or alliance partner in a structure that would benefit from Armstrong's leadership also is an option.

But a spinoff similar to that of Time Warner Cable later this month seems a distinct option given Armstrong's stature and the fact AOL hasn't been able to reach deals in talks with the likes of Yahoo and Microsoft. "We believe the only reason that Armstrong would agree to run AOL is the ability to manage a public company of his own in the near future," Pali Research analyst Richard Greenfield said.

Armstrong, who was Google's senior vp, is expected to start at AOL next month. Falco and AOL president and COO Ron Grant will leave after a transition period.

"Tim is the right executive to move AOL into the next phase of its evolution," said TW chairman and CEO Jeffrey Bewkes, who brought in Falco in a bid to transform AOL into an ad-driven free platform.

Armstrong worked at Google for 81/2 years. The firm said it plans to replace him from within. (partialdiff)
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