AOL Says: You've Got A New CEO

3/14/2009 2:00 AM Eastern

Time Warner Inc.'s troubled AOL shook up its top management late last Thursday, naming former Google executive Tim Armstrong chairman and CEO and announcing that current chairman and CEO Randy Falco and president and chief operating officer Ron Grant will leave the company after a transition period.

Armstrong was a senior vice president at Google, a member of Google's Operating Committee and served as the president of the Americas Operations. Under the Americas Operations, Armstrong's team managed publisher and advertiser relationships and platforms with some of the world's most widely recognized media and agency brands.

He joined Google in 2000 from where he was vice president of sales and strategic partnerships and opened the first office outside of the Mountain View, Calif., headquarters.

“Tim is the right executive to move AOL into the next phase of its evolution,” Time Warner chairman and CEO Jeff Bewkes said in a statement. “At Google, Armstrong helped build one of the most successful media teams in the history of the Internet — helping to make Google the most popular online search advertising platform in the world for direct and brand marketers. He's an advertising pioneer with a stellar reputation and proven track record. We are privileged to have him preside over AOL as its audience and programming businesses continue to grow and its advertising platform expands globally. He'll also be helpful in helping Time Warner determine the optimal structure for AOL.”

Falco and Grant have come under fire recently as AOL has struggled. While the company did not say specifically when Falco and Grant would leave, Bewkes thanked them for their service.

“As Randy and Ron move on, they leave AOL with our gratitude and appreciation for remaking the company and bringing it to a new and promising level,” Bewkes said.

Pali Research analyst Richard Greenfield, who last Thursday — before the Armstrong announcement — called for Falco and Grant's ouster, said the move was a coup for AOL.

“We never anticipated an executive of Tim Armstrong's pedigree to take the reins at AOL,” Greenfield wrote. “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 (he was unlikely to run all of Google anytime soon). Tonight's management change at AOL is a significant positive for Time Warner Inc. shares, as it will mitigate fears (at least near-term) about Time Warner's most worrisome asset.”

AOL has struggled for years to find its niche in the online advertising world after jettisoning its subscription-based model, championed by Bewkes, in August 2006. Although the Internet giant had some early success — ad sales rose 46% in the first full quarter after the announcement — it has struggled of late. In the most recent fourth quarter, revenue at AOL declined 23%, fueled by a 27% drop in subscription revenue and an 18% decrease in advertising sales.

“I'm very excited about the opportunities presented in leading AOL,” Armstrong said in a statement. “AOL has a wide-ranging set of assets and audience. The company is well positioned to enhance those assets into a larger share of the Internet audience and advertiser communities. AOL and Google have been partners for years and I look forward to collaborating with Jeff Bewkes and his team as we explore the right structure and future for AOL.”

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