AOL CEO Tim Armstrong Continues to Defend Huffington Post Deal

Tim Armstrong - AOL Buys Huffington Post conference - 2011
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He tells an investor day that AOL will be a profitable, growing company, that it is very different from the much-maligned AOL Time Warner and that the Huffington Post is “unbelievably fantastic.”

NEW YORK – AOL chairman and CEO Tim Armstrong on Thursday said that the company is very different from the much-maligned former AOL Time Warner and once again defended the Huffington Post acquisition as “one of the smartest deals” the company has made, saying that people who have criticized it just "don’t understand it.”

Opening an investor day in Manhattan’s SoHo, he told Wall Street attendees that “AOL will be a profitable, growing company” and that it is “severely undervalued.”

For those who haven’t followed his attempts to turn around the online company, Armstrong highlighted that “AOL Time Warner is dead” and that throughout the day they would see “a different company” with a new mission and a desire to win. He later told the crowd that they must let go of negative views stemming from the AOL TW era. "This is a new AOL," he emphasized.

AOL spun off from TW under Armstrong's leadership in late 2009, and the CEO and his team have focused on rebuilding the company. In line with that, top executives on Thursday spoke of the company having completed its stabilization phase and having entered its comeback phase.

CFO Artie Minson highlighted a "significantly improved balance sheet" and reiterated the promise that the online firm will return to growth in adjusted operating income before depreciation and amortization, a measure of profitability, in 2013. Contributions from such acquisitions as the Huffington Post, which is expected to report about $10 million in OIBDA this year, "strong expense controls" and moderation in search and subscriber revenue declines will all be key contributors, Minson said.

In another sign of the rebuilding process, Armstrong later also highlighted that the AOL brand now reflects his team’s renewal efforts. It has returned to the top 50 brands in the past year for the first time in probably a decade, he said.

While some on Wall Street have suggested that AOL could benefit from going private and ending its stock market listing, Armstrong told reporters after Thursday's event that being publicly traded has the advantage of being more transparent about the company's rebuilding.

Speaking about the Huffington Post, Armstrong said that it is an “unbelievably fantastic company” with a fantastic leader in  Arianna Huffington.

While some reports have suggested that the deal has led to cultural changes that has caused some personality clashes here and there, Huffington said the combination has worked out smoothly. “It’s working remarkably well,” she said. Armstrong and Minson also signaled that they have been happy with the deal's execution and that the Huffington Post has performed better than expected so far.

Highlighting the Huffington Post’s growth, Huffington herself said it recently overtook the New York Times in terms of unique monthly visitors and will surpass 100 million comments this year in a sign of its strong social media focus.

Huffington also mentioned such new sections being launched as ones on games and parents. Plus, Huffington Post plans to push overseas this year with launches coming in a dozen countries, such as France, Germany, Brazil, Australia and India, she said. She added that she would make her way to Paris after the investor day.

Armstrong again highlighted that AOL is focused on content creation and curation, which happens in collaboration with creators.

In addition, he described brand and video ads, local monetization, as well as profitability and growth as key focus areas for him.

Discussing the brand ad space, he said: “We are changing banners and buttons into content,” arguing that both consumers and advertisers want ads to be another form of content. ?

Asked about previous rumblings that AOL could do a deal with Yahoo, Armstrong once again signaled his team has set up the company to go it alone. "Pretty dramatic changes" at AOL since his arrival have "set us up" to operate as an independent entity focused on organic growth, but he kept his options open.

Armstrong also said that there is "a lot more we can do" with film studio and TV network partners in the future, but he didn't provide specifics.

Among the people spotted at the investor day was former William Morris Agency chairman Jim Wiatt, who was an AOL board member and has more recently been a strategic advisor to Armstrong. Wiatt flew in from LA for the day. 


Twitter: @georgszalai