It’s not a big surprise that the giant and perpetual-motion online news site would do this.

After all, in the new age of media, newspaper Web sites are turning more toward streaming and on-demand video, attempting to take text-driven reporting and present it in rich, feed-it-to-me news packages.

But whether consumers want to tune in on schedule or call up news videos when they feel like watching is still up for debate.

In the HuffPost’s case, the video will be streamed to its flagship site, as well as to other AOL Web sites.

Jeff Bercovici of Forbes had the scoop on this a couple weeks ago, laying out Arianna Huffington’s ambitions to meet the increasing demand — at least, on the part of advertisers — for good video content.

Ambitious is probably the right word, since the Huffington Post and AOL plan to stream 12 hours a day, five days a week, with eight hours of content produced in New York and the rest out of Los Angeles.

Eventually, Huffington Post founding editor Roy Sekoff said that the network is aiming to reach 16 hours a day of live daily programming. With 2012 elections looming, the network will also feature lots of political reporters from Washington, he added.

The plan will also be costly — with the AOL media unit putting a hundred employees behind the streaming video effort, culling from the current HuffPost-AOL editorial staff of 320, as well as new hires with video-specific skills.

Will it work?

There’s little question that Web video viewing is on the rise. According to a 2011 Nielsen report, U.S. consumers now spend an average of four hours and 20 minutes per month watching video on the Web, an hour and 10 minutes more than the amount they watched in early 2010.

But Huffington and Sekoff believe that, despite the fact the HuffPost is mirroring the cable TV model and a lot of the programming will be live, consumers still aren’t all that interested in watching on a set schedule.

What Huffington Post is doing is not unlike what the Wall Street Journal Digital Network has been building over the last few years.

(Full disclosure: The WSJ, for those who aren’t aware, is owned by News Corp.’s Dow Jones, which also owns this Web site. I also previously worked at the WSJ’s video unit.)

Like WSJ’s video product, HuffPo will offer on-demand clips in addition to the live-streaming, deploying in-house staff as talent, plus Patch local reporters and sources in from the field using Skype video. It will also distribute the news video content on mobile phones and tablets.

The New York Times has also gotten into the streaming video game with its latest effort, Business Day Live, which launched yesterday.

Sekoff dismissed the idea that HuffPost was mimicking other news organizations, or even cable.

“No offense to the WSJ, but I think we got more comments this month than the WSJ did last year,” Sekoff said, referencing the more than six million comments on the main HuffPost site in January alone. “People don’t want to be talked to when they get their news; they want to converse with.”

And he said that HuffPost has no plans to become a cable TV network, although they’re open to potentially sharing the video content with interested networks. In terms of revenue generation, Huffington Post currently doesn’t have advertisers committed to the streaming network, but is seeking a handful of partners for launch.

Right now, there are no plans for a set schedule of programing, said Sekoff, because he feels that Web video consumers ultimately don’t care when the video is on.

“People don’t come home from work and say, ‘Oh it’s 9 pm, I think I’ll watch sports on the Web now,’” he said. “We just don’t think it’s there yet.”

Huffington concurred and said her own casual Internet video-watching habits — which include bouts of “Saturday Night Live,” Comedy Central and “The Good Wife” — reflect this.

“We don’t think Web video is about appointment-watching.” she said. “But just because people are watching Web video one way, doesn’t mean it’s the end of other kinds of consumption.”

AOL said it earned 23 cents a share for the fourth quarter on revenue of $576.8 million, compared to 60 cents per share on $596 million in the same quarter a year ago.

Wall Street analysts had expected the New York-based Internet company to earn 16 to 17 cents on revenue of $572 million.

While the results are still down significantly from a year ago, AOL’s stock has been rising — gaining more than 25 percent in the quarter — since CEO Tim Armstrong has improved advertising revenue.

That was up 10 percent in the quarter, the third consecutive quarterly increase.

Subscription revenue from its access business continued to fall — down 18 percent — although that was the lowest rate of decline in five years.

AOL also noted that it had encouraging improvements in certain areas of its business:

Video: AOL grew its videos, video views, video ad impressions and revenue at double-digit rates.

Brand Advertising: Project Devil advertisers, impressions and revenue grew at double-digit rates.

Local: Patch grew traffic, advertisers and ad impressions more than 100% year over year.

Traffic: Consumer usage was flat to Q3 2011, as growth in the Huffington Post Media Group sites offset declines at MapQuest and AIM.

But read for yourself — here are all kinds of charts and graphs from AOL:

AOL_Q4_2011_Earnings Release

AOL_Q4_2011_Earnings_Presentation

AOL_Q4_2011_Trending_Schedules

Starboard — one of AOL’s largest shareholders, owning about 4.5 percent of the stock — sent a letter late Tuesday to AOL Chief Executive Tim Armstrong, saying the company’s efforts to transform itself into an advertising-supported online media entity, from its roots as a subscription-based dial-up Internet access business, are destroying shareholder value.

The nine-page letter to AOL, which was reviewed by The Wall Street Journal, echoes the frustration of many AOL investors and Wall Street analysts, who have been skeptical of the company’s multiple turnaround strategies amid a nearly 70 percent drop in the stock price this year. However, it stops short of suggesting that AOL sell money-losing assets or pursue alternatives such as a sale.

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Saul Hansell, the prominent former New York Times tech reporter who went to AOL several years ago to head one of its content efforts called Seed, will leave the company to become an entrepreneur in residence at Betaworks.

The move to the New York venture firm is the right one now, said Hansell in an interview today.

“I have been watching people go starts thing for a long time and now I want to go start things,” he said. “I’ve got some ideas around news that I want to explore.”

Hansell, in a blog post, did try to not paint the move as as anti-AOL one:

“I know my friends in the technology press well enough to suspect some of them will see my move as part of a broader trend at AOL. I’m not sure the easy take is the right one. Based on my experience, I am more bullish on [AOL CEO] Tim Armstrong’s clear vision of a company built from the ground up for online journalism and the potential of AOL’s assets to achieve that vision.”

Hansell joined AOL the day after it split from Time Warner to run what he jokingly calls the “free-range, organic content farm” of Seed and has remained through its many iterations, including the purchase of the Huffington Post.

He is currently the “Big News” editor in that unit, which centers around topics.

Here’s Hansell’s blog post on the move:

Heading into the workshop.

Two years ago, when I explained to my children why I left the New York Times, one of the greatest spots ever to be a reporter and writer, I told them that I wanted to be an inventor. Since then, I’ve had the thrilling experience of being part of AOL, which is doing more than nearly anyone else to rethink the way that news is gathered, presented and paid for.

Now it’s time to strike out on my own and seek my fortune as an inventor. I’ve left AOL, and Monday I started as an entrepreneur in residence at Betaworks. If you’re not familiar with it, Betaworks has started and invested in a number of companies that are on the vanguard of real-time social experiences — several of which relate to news and publishing — including Bit.ly, ChartBeat, TweetDeck, and News.Me. It’s run by John Bortwick, whom I first met in 1997 when he sold his startup, Total New York, to America Online. We’ve become friends, and I couldn’t think of a more fertile environment in which to germinate a new idea than the bustle of creativity bursting out of the Betaworks loft in the meat packing district.

I know my friends in the technology press well enough to suspect some of them will see my move as part of a broader trend at AOL. I’m not sure the easy take is the right one. Based on my experience, I am more bullish on Tim Armstrong’s clear vision of a company built from the ground up for online journalism and the potential of AOL’s assets to achieve that vision. At AOL, I’ve had the pleasure of working with some of the smartest and most dedicated journalists, engineers and product executives I’ve ever met. And the brilliant acquisition of the Huffington Post brought in many more people who have been outpacing the industry through journalistic innovation.

I will always be grateful to Tim for giving me the chance to prove that I had more to contribute to a journalistic organization than simply articles and to Arianna for inviting me to join the HuffPost team. And I’m in debt to so many who offered so much advice –some of which I ignored to my own detriment — on the nuances of technology, product design, PowerPoint, and the ways of big companies. Yet as AOL continues to refine its organization, it became clear that this was the time for me to try my hand at starting a company.

It’s too soon to say much about what I’m doing. But I think there is a lot left to invent around both how to present news to people that takes advantage of the technology available today.

I expect you’ll see a lot more soon.

But Wall Street will quickly scrutinize the breakdown of CEO Tim Armstrong’s sales performance. Last quarter, the company posted a 5 percent ad bump, but investors hated the details: Much of the growth was coming from the company’s low-margin network business, in addition to gains from its HuffPo and TechCrunch acquisitions.

What Wall Street really wants to see (or at least what it wanted to see last quarter) is organic growth in the company’s core display business, and improving earnings.

Overall, AOL’s ad sales are up 8 percent, and display is 15 percent. Investors might raise an eyebrow over the fact that domestic display growth of 14 percent is a sequential decline from last quarter’s 16 percent rise, though. And bear in mind that these numbers include both TechCrunch and Huffington Post boosts. Also worrisome — a mere 1 percent increase in the company’s owned and operated properties — again, that’s after accounting for those two big acquisitions. (Click image to enlarge.)

Another flag for AOL: Even though it has added TechCrunch and the Huffington Post over the last year, traffic to AOL’s own sites has barely budged: A year ago, AOL attracted 106 million monthly unique visitors to its sites; this year, the total only moved up to 107 million.

AOL earnings call starts at 8 am ET, and beyond this morning’s release, investors will also want to hear what Armstrong is seeing in the ad market in general. Until recently, digital ads have been booming for just about everyone except for AOL and Yahoo, but recently we’ve heard about softness/slower growth making its way to the Web, too. (Though no sign of that from Google.)

And, of course, Wall Street will also want to see if Armstrong has anything to say about eternal speculation that he wants to link up with Yahoo itself.

Over the past couple of years as AOL Chief Executive Tim Armstrong tried to repair the company’s Web business, rivals like Google Inc. and Yahoo Inc. focused on the next digital frontier: mobile. As a result, AOL now lags behind in mobile.

AOL ranked eighth in U.S. mobile ad spending with 0.8 percent of the $877 million market last year, according to research firm International Data Corp. Google, in contrast, leads with 59 percent of the market. AOL had 3.4 percent of the fixed Internet ad market last year, estimates research firm eMarketer Inc.

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Jared Grusd, AOL’s SVP of business development and chief of strategy, is leaving the New York Internet giant to work at Spotify, according to sources close to the situation.

At AOL, according to his bio, Grusd “oversees the organization responsible for all domestic and international strategic partnerships and commercial alliances for AOL and each of its operating units. He is also responsible for identifying and evaluating new corporate strategies and opportunities for the company.”

The marathon fiend and former Google exec — who held top legal-deal jobs there — also serves on AOL’s Executive Management Team.

It is not clear what the well-respected Grusd will be doing at the online music service, which has been expanding its executive ranks as it has moved aggressively into the U.S. market. But sources said it was a high-level position in New York.

Spotify recently hired former Clear Channel exec Gerrit Meier as GM of distribution and partnerships, reporting to U.S. head Ken Parks.

Spotify also just scooped up former AOL sales head Jeff Levick — another Google alum — as its chief advertising officer.

The departure of Grusd further thins out the exec ranks at AOL, which is still mired in a turnaround under the leadership of CEO Tim Armstrong (yes, he too is a former Googler!).

I lobbed a query into AOL PR for comment, and am awaiting news of my news.

With the continuing negotiations between AOL and high-profile TechCrunch founder Michael Arrington likely to come to some conclusion soon, the big question remaining is whether he will appear at its flagship conference, TechCrunch Disrupt, which officially begins tomorrow.

Sources said that seems more likely than not, although the talks between AOL and Arrington are not resolved as yet and his appearance at the highly lucrative conference is part of a whole package.

But it seems unlikely that neither Arrington nor AOL CEO Tim Armstrong and content chief Arianna Huffington wants to damage TechCrunch Disrupt, which makes piles of moolah from sponsors and fees, attracts thousands of attendees, and where a plethora of promising start-ups compete with each other.

And, in fact, some of the slated speakers I have contacted have said that they have not been told of any changes in the program.

A hackathon of those entrepreneurs is now taking place before the main event, where well-known Silicon Valley players will be interviewed on stage by the staff of TechCrunch.

The conference is mostly run by TechCrunch exec Heather Harde, as well as the site’s leading editor Erick Schonfeld.

But, of course, TechCrunch Disrupt has starred Arrington, the larger-than-life blogger now turned venture capitalist.

That shift and how badly it was done is at the center of complex severance negotiations.

As I previously wrote, sources said the company has so far refused Arrington’s bold demand, posted on TechCrunch itself, to either give the popular tech news site “editorial independence” or sell it back to him.

As I wrote last week:

The situation between the popular tech blogger and top execs at the Internet company — which bought his site earlier this year — comes after a week of increasingly testy back and forth between them, after it was revealed that Arrington was starting his own $20 million venture fund called CrunchFund.

The move caused a media firestorm over the ethics and propriety of the move, which was followed by an ugly internal war at the company, with Arrington and TechCrunch staffers on one side and Armstrong and Huffington on the other.

(Full disclosure: Although no one cares what I think, I consider the deal appalling and wrote that it was a “giant, greedy Silicon Valley pig pile.” Now, it seems to be 56 percent piggier!)

After many confusing messages from AOL, Arrington was removed from his longtime job at TechCrunch and placed in its venture arm, after editorial objections from Huffington.

That had supposedly been the the plan until it all blew up, with reveleations about what the CrunchFund deal — which includes $10 million from AOL — meant to TechCrunch and its news gathering.

That seemed clear from a widely cited quote from CrunchFund investor and well-know Silicon Valley entrepreneur Reid Hoffman to me last week:

“TechCrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, CrunchFund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.”

There you had it: No one can afford to be out of the deal flow in these competitive times, even if it means cutting corners and using a tech news site as fodder.

Arrington obviously has another view of the deal he struck with Armstrong and, sources said, wants his powerful tech news platform back. He has been talking to many Silicon Valley power players about the situation, said sources.

More to come soon from this Silicon Valley soap opera. And, hopefully, it will be a happy — well, happy-ish — ending.

(Full disclosure: AllThingsD also runs conferences that could be construed as competitive to TechCrunch Disrupt, although we both we seem to do just fine. In addition, Walt Mossberg and I are getting along like peas and carrots, although we vigorously disagree over the humongous talent of Barry Manilow.)

If drafted, I will not run; if nominated, I will not accept; if elected, I will not serve.

I think that about takes care of it on the possibility of me becoming CEO of Yahoo.

And, according to at least 223 sources of mine at Yahoo, the same goes for AOL CEO Tim Armstrong, who suddenly got mentioned in a speculative article by Bloomberg yesterday as a possible merger partner and a potential top leader of Yahoo.

Given that the affable Armstrong is in the midst of several serious crises at his own company — funny how that works.

It is actually more comical, because this story is the product of over-enthusiastic bankers essentially spinning a tale of hopes and dreams that has no basis in reality.

To add to the confusion, AOL and Yahoo now share Allen & Co. to evaluate their strategic options, adding yet another level of inbred oddness on top of the situation.

The Bloomberg story was carefully couched as Armstrong being interested in a hookup between AOL and Yahoo, but the implication was that it was a serious effort.

It certainly is true that Armstrong has talked many times about a possible link-up of AOL and Yahoo in the past, even publicly. And, well before he was CEO, the pair of companies held very serious talks about combining.

But no longer — and definitely not currently — is there anything there that approximates a serious effort.

If wishes were horses, I suppose, all stumbling Web companies would ride away together into the sunset of success.

And I love me a happy movie ending!

But the real story is a lot tougher for Armstrong, who most definitely is increasingly in need of some kind of miracle, because — despite his best efforts and some progress at turning around the perennially troubled AOL — Wall Street is growing weary of waiting for his strategies to work.

AOL stock is down 36 percent since his late 2009 debut and almost 38 percent since the beginning of 2011.

As The Wall Street Journal wrote yesterday:

“Since Tim Armstrong took over the struggling Internet company in 2009, AOL has acquired more than half a dozen companies in an effort to shake off its reputation as an Internet has-been and become an ad-supported destination for news and entertainment content on the Web. It hasn’t worked.”

In other words, it is crunch time for Armstrong.

Actually, add that onto the pile, too.

That would the controversy over how Armstrong has dealt with one of its higher profile acquisitions, the popular tech blog, TechCrunch.

The train wreck of money, journalism and ethics — as well as a fantastically dysfunctional cast of characters — is still unfolding at AOL, as the company seeks to part ways with TechCrunch’s founder and editor Michael Arrington after it revealed it was an investor in a new venture fund he would run.

After much noisy mishegas over the last week, it’s clear any outcome is still not a good one for AOL or Armstrong and that the incident has tarnished the company further.

Which brings us back to Yahoo — which is having its own “Desperate Geeks of Silicon Valley” plot line with this week’s firing of potty-mouthed CEO Carol Bartz — as a possible port in Armstrong’s storm.

It’s not, of course, because it would add a level of messy complexity and potential for more disaster that only a fee-seeking banker could love.

But — and this is the honest truth — for all the money they are being paid already, they might want to come up with some better ideas, and quickly.

I cannot express my delight at finally getting to appear in a CGI news video by Next Media Animation, in a segment about the CrunchFund controversy.

In it, the New York Times’ David Carr and I attack TechCrunch editor Michael Arrington with paintball guns. He is wearing a green wizard outfit.

Later, a flaming Arianna Huffington and AOL CEO Tim Armstrong make an appearance.

Yes, it is that kind of video.

Enjoy:

The firing of Yahoo CEO Carol Bartz leaves open one of the bigger and more difficult jobs in tech — one that has taken its toll on many.

Nonetheless, rapper Snoop Dogg stepped right up to the Twitter plate yesterday, as soon as news broke of the ouster.

Tweeted Snoop Dogg:

“Im takn over as tha CEO of Yahoo. Need sum of tha Snoop Dogg content ya digg. Nuff Said.”

Not nearly nuff!

Thus, while the Yahoo board has yet to begin a search, I have already been hard at work on selecting the next CEO.

(Last time, the company took none of my suggestions, but after the most recent result, the directors might want to pay mind!)

Sources said Yahoo is looking for an experienced Internet type, either from inside or outside the company.

“Yahoo has put its flag in the ground as a digital media company with a technology base,” said one source. “The job requires big buckets of expertise and needs someone who will grow the company.”

Here I go with the outsiders:

Peter Chernin: The former News Corp. exec has been eyeing Yahoo for a possible takeover with other investors. Both Yahoo and I had picked him when co-founder Jerry Yang stepped down as CEO almost three years ago, and he had declined the offer. This time, perhaps a big chunk of the company and total autonomy would work, even if making a hit like “Rise of the Planet of the Apes” is more fun.

Sheryl Sandberg: The COO of Facebook is sort of the anti-Bartz, with a smooth and efficient persona, and she is an experienced tech exec. But the former Google exec is at a place of growth at the social networking site, and is unlikely to want to leave the big show, especially since a blockbuster IPO is looming.

Jason Kilar: The Hulu CEO is in the midst of the process of selling the premium video service, with Yahoo as a bidder. While he has some tense relations with the studios, Kilar is top notch in his dedication to consumer products, and has a lot of experience from his stint at Amazon, too.

Dan Rosensweig: Currently CEO of IPO-headed Chegg textbook rental service, the former Yahoo exec never got a chance to run the company as its top leader. Well-connected and still well-liked by the troops at Yahoo, it still would be pretty hard for him to go home again.

Dave Goldberg: Sure, he’s married to Sandberg (see above), but the savvy CEO of polling phenom SurveyMonkey is one of the sharpest thinkers in Silicon Valley. He sold his music company to Yahoo many years ago and has a strong background in consumer online services.

Jon Miller: The chief digital exec at News Corp. almost got the CEO spot years ago when Carl Icahn was agitating for change at Yahoo, before Time Warner blocked him via a noncompete. With the mishegas at the media giant, and dwindling digital businesses there, it might be a good escape hatch for Miller.

Susan Wojcicki: The accomplished Google exec, who runs all its ad products, has the kind of calm, cool, collected persona that Yahoo could use right about now. The search giant was founded in her garage, and she has been a key part of its success since then. Wojcicki is also an understated class act in hey-look-at-me Silicon Valley.

Todd Bradley: The Hewlett-Packard exec just got blindsided when the company kicked webOS to the curb. While he is in line to run a possible spinoff of the device business, Bradley might also want to jump out of the frying pan into the fire.

Mike McCue: The CEO of Flipboard would certainly energize Yahoo with his intense focus on quality and consumer delight. The news app start-up could be a good addition to Yahoo, and McCue, the former Netscape and Microsoft exec who is well-liked in the Internet scene, would be, too.

Joanne Bradford: The former Yahoo advertising head bolted Bartz’s regime early on to run revenue for Demand Media. Well-liked in the ad business, she also knows where all the bodies are buried at Yahoo. Since ads and media are key at the company, she’d make an interesting choice.

Yusuf Mehdi: The Microsoft online exec would also be a left-field candidate to run Yahoo, given his even-keeled personality and longtime experience in the sector. And, though pricey, Mehdi’s impact on Bing search has been important. But he’s also been involved in the software giant’s lackluster ad and search partnership and still has not turned around the situation at MSN.

Kevin Johnson: The former Microsoft exec and current CEO of Juniper was once slated to be the CEO of Yahoo, had Microsoft managed to win the company in its hostile takeover attempt. In fact, Johnson was the architect of the idea of Yahoo running the media and Microsoft running the tech.

Tim Armstrong: Well, he might have been a good candidate before the downward slide of AOL and a recent series of questionable judgments. If Armstrong can’t keep a loud tech blogger in line, it’s not clear he can wrangle the Yahoo beast.

And here’s the insider scoop:

Ross Levinsohn: The former News Corp. exec is running the Americas for Yahoo, which puts him in charge of the company’s key businesses. But he’s still struggling to turn the ad business around, and how well he does that could be a major determinant of his success. But fantastic hair!

Blake Irving: The former Microsoft exec has an amiable nature and is well-liked at Yahoo, but he still needs to show that the company can ship some innovative products, and quickly. Like Livestand, the news reader, which is muchly late.

David Kenny: The Yahoo board member is now president of Akamai, which might preclude him from the job. But the well-regarded exec — he’s a snazzy dresser, too — ran one of the Internet’s top digital ad agencies and now has tech chops from the content delivery network.

Memo to Yahoo board: I have a million more ideas, from former Viacom exec Tom Freston to former Yahoo board member Eric Hippeau. Or why not bring back a passel of former Yahoos to advise, such as former CEO Terry Semel or former president Sue Decker?

Or Oprah! I hear Winfrey will be in Silicon Valley later this week, and she has a lot more free time now.

Like Snoop Dogg, she would fo shizzle be the bomb to cover.

Related posts

• As Yahoo Continues to Wobble, Investors (And Board) Eye Options
• Exclusive: Carol Bartz Out at Yahoo; CFO Tim Morse Named Interim CEO
• Carol Bartz’s Last F%*& You — Now Aimed at Yahoo Board
• Yahoo’s Statement on Bartz Ouster
• Wall Street Likes Bartz’s Firing — Yahoo Stock Spikes on News
• My Picks for Yahoo’s Next CEO — Maybe Snoop Dogg, Ya Digg?

Here’s another interesting wrinkle to the ongoing saga of AOL, TechCrunch founder Michael Arrington and his nascent venture firm, CrunchFund.

Since the controversy erupted last week, Arrington has reached out to AOL CEO Tim Armstrong, as well as others in Silicon Valley, about buying back his popular tech news site.

Sources said Arrington needs funding to do so — irony alert! — and told them over the weekend that he planned to use his blogging bully pulpit to force AOL into giving up the site it bought for more than $25 million almost exactly a year ago.

But sources said — at this point — AOL is not inclined to sell the site, which has prompted Arrington to pen a blog post on TechCrunch, not-meant-as-a-joke-titled “Editorial Independence,” suggesting they do so.

Quelle surprise!

We’ve proposed two options to Aol.

1. Reaffirmation of the editorial independence promised at the time of acquisition. Given the current circumstances, that means autonomy from Huffington Post, unfettered editorial independence and a blanket right to editorial self determination. To put it simply, TechCrunch would stay with Aol but would be independent of the Huffington Post.

or

2. Sell TechCrunch back to the original shareholders.

Arrington used an image of the Spartans from, I think, the movie “300,” on the post. Memo to Mike: All the Spartans died in the end, however valiant. It goes without saying — this situation is not valiant and you are definitely not King Leonidas.

“It is at a stalemate, so this is the result,” said one person with knowledge of the pugnacious effort by Arrington to take back his baby.

Which, of course, he sold in the first place.

AOL has stated it will not allow Arrington to remain its editor or have “influence on coverage” while also doing a venture fund.

Thus, some of Arrington’s staffers, such as M.G. Siegler, have already been plowing the ground ahead of Arrington’s post.

Siegler, for example, penned a weepy diatribe about how unfair it all is and how different the site operates from slow-footed meanies at big media organizations such as the New York Times. The Times strafed Arrington in a David Carr column yesterday.

Wrote Siegler, in what can only be described as soap-opera fantastic: “TechCrunch is on the precipice. As soon as tomorrow, Mike may be thrown out of the company he founded. Or he may not. No one knows.”

Tune in tomorrow to see if AOL’s content chief and Arrington boss Arianna Huffington will use that gun in her pocket. Or will she use the razor-chiseled cheekbones of Armstrong to slice her new nemesis?

(Alls I can say to add to what I have already said, at this point: Good lord. But, wait, isn’t there a TechCrunch Disrupt conference next week to hawk and make it all about Arrington and not the entrepreneurs? This explains everything!)

While Siegler is trying to make it all sound as if it is so very unfair, since the site is presumably so very special, AllThingsD operates in a similar quick-edit way to TechCrunch — where I will underscore there are some terrific journalists.

But — because it is simply flat-out wrong on every possible scale — neither Walt Mossberg nor I would ever consider being editors of the site while also running a venture fund.

(In fact, it is now a standing rule at ATD that, if we ever did such an unthinkable thing — which of course we never would — our writers tell us we stink rather than praise us.)

Meanwhile, we’ll be busy breaking some actual tech news on this site, like here and here and here, while TechCrunch presumably faux-burns and AOL fiddles.

So here’s the latest (for those just tuning in, we’ll do backstory later — who said the inverted triangle was dead?):

TechCrunch’s Mike Arrington is no longer working for AOL’s Huffington Post Media Group, but he remains employed by AOL. He’ll be running his new CrunchFund as part of the company’s AOL Ventures arm, says Maureen Sullivan, who runs AOL corporate communications.

That’s consistent with what the company said yesterday, but contradicts what AOL HuffingtonPost spokesman Mario Ruiz told the Business Insider this morning. But since Sullivan reports directly to AOL CEO Tim Armstrong, we’ll take her word on this.

Sullivan also says that Arrington is no longer officially working for TechCrunch, the powerful tech Web site he built, then sold to AOL last year. That also syncs up with the official line from yesterday. AOL will hire a new managing editor, but Arrington will keep his “founding editor” title, and will continue to write for the site, but will need to disclose conflicts of interest when he does so, etc.

Again, no change. So really, the only question is: What kind of influence and input will Arrington have on TechCrunch when he’s not writing? Here this gets sticky, and it doesn’t look like it will ever be unsticky.

Sullivan says that Arrington’s relationship with TechCrunch is “still to be determined, and it’s important to make sure that Arianna [Huffington] is super comfortable with that relationship … I think that everyone is going to be very careful that there isn’t influence on coverage.”

Just to be clear about it, Sullivan called me back a while later to reiterate the same points. “Michael is now a professional investor working for AOL. He will have no editorial control.”

Hear that, CrunchFund investors? The guy you are handing $20 million to won’t be able to influence the way TechCrunch interacts with your companies, your investments and your potential investments. Is that what you signed on for?

Now, one last compare and contrast exercise. Here’s Greylock Partners Reid Hoffman’s rationale for investing in the CrunchFund, via Kara Swisher’s story this morning:

“Techcrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, Crunchfund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.”

It’d be great to hear from the principals on this, so I’ve dutifully pinged Arrington, Huffington and Armstrong. But my hunch is that some of them, at least, will be mum for a bit. More later! I bet!

Of course I have something to say about the news yesterday that AOL would be a key investor in a new early-stage venture fund being started by TechCrunch’s perpetually petulant editor Michael Arrington — with a big, fat and decidedly greasy assist from a panoply of Silicon Valley’s most powerful VC firms and angel investors.

Arrington has previously called me “chief whiner” — oooh, buuuurn, although fair enough, since I have compared him to an egomaniac turtle named Yertle in the past — about my nagging him over the importance of upholding standards of fairness and ethics in journalism.

So as not to let him down, let me begin the whining.

First, my initial reaction when I first heard about the deal: Ugh. Sigh. Hopelessly corrupt. Now 100 percent more icky! A giant, greedy, Silicon Valley pig pile.

I was upset.

By early evening, after my kids told me to chillax, my dark mood had changed to accept that the transaction — however profoundly distasteful to me — was part and parcel of the insidious log-rolling, back-scratching ecosystem that has happened in every other center of power in the universe since the beginning of time.

And so it goes in Silicon Valley.

In fact, the creation of a $20 million investment kitty that Arrington has dubbed CrunchFund is simply the formalization of a long-standing arrangement that has already been going on since he founded his popular tech blog.

That is to say, in which the basic standards of journalism are first warped by calling it newfangled truth-telling and then endlessly corroded by using a wily and unusually aggressive combination of favors and threats to extract, from start-ups and VCs in need of press, both exclusive access and information.

And now, inevitably, money.

This could have been a lot cleaner, of course, by Arrington simply resigning from TechCrunch, becoming a VC and perhaps starting a new blog where his agenda is much clearer, from which he could huff and puff away as he does with much entertaining gusto at real and (mostly) imagined slights.

There is certainly precedent for VCs blogging, including Fred Wilson, Brad Feld and Ben Horowitz. And, despite my criticisms about ethics, it is clear that Arrington is a talented writer whose unique voice would be even stronger if it was truly seen as separate from what has become a news organization.

But because of his obvious need to be the center of attention — requiring the ermine kingmaker mantle and foisting his patented I’m-here-to-tell-it-like-it-is attitude on us all — that appears to be impossible.

(By the way, I await Arrington’s usual inane rant about the fictional conflicts of interest related to my gay Google marriage anytime now in 3 … 2 … 1, always and purposefully leaving out the pertinent facts that I can only wed one person, get no financial benefit and am also a prominent critic of the scary search behemoth, while he can make a badillion questionable and grossly tangled investments.)

Personal annoyances aside, what’s most interesting here is the group of Silicon Valley power players who lined up to bow and scrape and then hand over a small pile of dough to the blogger who would be king.

They include: Sequoia Capital, Redpoint Ventures, Kleiner Perkins, Greylock Partners, Austin Ventures and Accel Partners, as well as individual investments from partners at Benchmark Capital and Andreessen Horowitz, entrepreneur Kevin Rose and DST Global’s Yuri Milner. And, of course, the inevitable Arrington BFF Ron Conway.

Holy googa mooga, that would be, well, everyone, except Ashton Kutcher and Justin Timberlake (who will surely appear soon enough).

As one person also pointed out to me, I don’t recall this many competing VCs investing in one company, let alone another venture fund.

It goes without saying that the reasons they all decided to jump in this fetid pool with abandon are quite varied, if all entirely compromised.

One investor told me — off the record, naturally — that he thought it would be an interesting experiment to see what happened and so he wanted in, especially since everyone else was doing it.

Another well-known VC said that there is no downside to being financially affiliated, especially in attracting talent to its start-ups, with Arrington and, by extension, TechCrunch.

The well-respected Reid Hoffman of Greylock was the only one brave enough to talk on the record, explaining the reasoning pretty clearly:

“Techcrunch will get some real deal flow from entrepreneurs that we would otherwise not see, because they have established a prominent position as the SV/Tech industry information feed. As many tech entrepreneurs read it — both within Silicon Valley and globally — and view the information news feed to be their target for announcing themselves to the world, Crunchfund will have access to deal flow to these diverse and early stage companies. Some of these companies will be the kind of early stage companies with billion-dollar potential that Greylock invests in.”

There you have it: No one can afford to be out of the deal flow in these times, even if it means cutting corners.

While TechCrunch’s owner, AOL, said Arrington will no longer be managing editor, with only writing duties at the site he dominates and with no editorial control, Hoffman’s use of TechCrunch for CrunchFund was accurate, because in the eyes of many they are interchangeable.

That’s due to the fact that Arrington still breaks or is clearly the source for important stories on the site and, more importantly, is the big swinging dude who attracts all the eager entrepreneurs to the party. He is the fulcrum of that site, even as it has grown.

And so it will remain, I am guessing, no matter how much AOL insists it will not be so, because the easy questions pile up quickly:

Will Arrington keep doing what are clearly news stories, for example, even though he protesteth too much — as he did in the New York Times yesterday — that he is not a journalist?

And, if so, is it right for him to do so given his insider status, creating a nonparity of sourcing and crystal clear conflicts of interest?

Most of all, can he resist his palpable love of news-breaking and scoops, even if he gets them in ever more unseemly ways?

As if to make it all pretty, Arrington told reporters yesterday that he has put a clause in his limited partnership agreement so he can report on anything he likes, and in any way, about his investors and their companies, however confidential, except those he invests in.

O joyous day! Freedom of the press is preserved and our sacred First Amendment can breathe a sigh of relief, now that it is enshrined in an unholy blogger-VC LP agreement.

After pausing for a moment so that Thomas Jefferson and Edward R. Murrow can stop spinning in their graves, you can go down this road for many increasingly bumpy miles, which only becomes more twisted and confusing as it continues.

I finally talked to one investor in CrunchFund, who said simply and honestly: “It’s not that much money, so who cares?”

Indeed, who does care anymore about crossing what had long been very bright lines in journalism and, if you want to get all cosmic, in life?

Obviously, most of all, not AOL, or its CEO Tim Armstrong, or its head of content, Arianna Huffington. The pair, for whatever reason, decided to make a startling exception for Arrington from a rule that explicitly bars reporters at its media units from investing in the companies they cover.

That happened after he recently did a complete 180 from a previous decision to stop investing and jumped right back in, leaving Armstrong and Huffington to clean up the ethical mess.

They only made it worse, with their decision to throw journalism under the bus by letting Arrington do as he pleased, while touting how important it was for other content sites at AOL to remain more pure.

In the spirit of full disclosure, these kinds of ethical lapses are endemic these days in journalism. Case in point: The appalling phone-hacking controversy taking place at News Corp.’s News International unit in Britain.

While I cannot speak for Dow Jones, I can say that the behavior in another News Corp. property certainly takes its toll on those who adhere to higher standards at the company, especially when it comes to morale.

Thus, I can imagine how others feel at AOL — including those you-know-who-you-are silent ones at TechCrunch — who can’t and, more to the point, wouldn’t make the deals Arrington has been allowed to get away with.

It is not a good feeling, I can assure you.

And, while I have not spoken to her about it, I’d imagine that Huffington cannot be thrilled to be pushing for better journalism at AOL and trying to burnish her cred by hiring some top reporters, while also having to deal with this.

That’s okay, because Armstrong was perfectly willing to do the awkward pretzel-twist needed to explain away the controversial situation, also in an interview with the Times:

“TechCrunch is a different property and they have different standards. We have a traditional understanding of journalism with the exception of TechCrunch, which is different but is transparent about it.”

In this case, Tim, I am sorry to inform you that transparency is a complete canard and is more likely to end up covering up a lot more transgressions than it ever will reveal.

And, essentially and lazily sloughing it off by saying, “That’s just Mike being Mike,” is not going to cut it, at least not with me.

Not that any amount of tsk-tsking about it matters, I suppose, as Arrington finally gets his fervent Pinocchio-on-a-star wish to be a real-boy VC, can add yet another tainted buck to the pile of billions his venture pals already have, and just call it another typical day in Silicon Valley.

Still, when you are the designated whiner-in-chief, it is pretty much all one can do.

While they are only small transactions, two of Yahoo’s top execs — Americas head Ross Levinsohn and its Chief Product Officer Blake Irving (pictured here) — seem to have forked over their own dough to buy shares of the troubled company.

Levinsohn and Irving — like a lot of other Yahoos in the same leaky boat — have lots of stock options in the Silicon Valley Internet giant that are likely very much underwater these days. They also have hundreds of thousands of cost-free restricted stock units.

Still, with Yahoo shares in a free fall, the pair apparently bellied up to the bar and purchased stock directly last Friday and on Monday, according to required insider filings.

Levinsohn bought 10,000 shares at $11.61 and Irving got 10,000 at $11.23.

It seems they are the only high-ranking execs who have bought Yahoo stock in a while, including its CEO Carol Bartz, without some link to shares they have been given by the company and via programmed or automatic purchases and sales.

Executives buying shares of their own company often are an indicator of confidence in the company, and CEOs — such as AOL CEO Tim Armstrong has — often do it in dicey times to make a statement of belief in its prospects.

It will be interesting to see if other Yahoo top execs do the same.

Yahoo could certainly use the boost. Shares are down 23 percent since the beginning of the year, giving it an affordable $16.7 billion market valuation.

Still, while both men initially lost money in the current market turmoil that has also hit Yahoo hard, they seem to be up about $10,000 each, for now, on their approximately $110,000 bets that Yahoo shares are too low.

Its stock closed up today 9.3 percent, at $12.86.

Wall Street says otherwise: AOL shares are off more than 20 percent on a day when the market is perking up, just a tiny bit – the Nasdaq is currently up 1.64 percent.

What gives? AOL CEO Tim Armstrong told analysts today that he wasn’t happy with some of the company’s results. But earlier this morning, when I told him that investors were dumping the stock, he told me a sell-off against the broad market uptick would be “hard to comprehend.”

So here’s an explainer, via Citigroup’s Mark Mahaney. The analyst didn’t lower his “hold” rating on AOL after this morning’s earnings, but he didn’t see enough to make him happy, either. We’ll use him, via the note he published today, as a rough proxy for disaffected AOL investors:

• Revenue was more than Wall Street expected, but the bonus dollars came from AOL’s less profitable network business, not its core display business.
• Meanwhile, that display business actually got weaker this quarter: If you pretend that AOL owned TechCrunch and HuffingtonPost a year ago (i.e. “pro forma results”), then display ad sales would have increased 9 percent this quarter, down from 12 percent in Q1.
• Those display dollars may have been at risk even before we were facing Maybe Recession 2.0, or whatever we’re going to call it: The company “noted significant weakness in June & July.”
• Earnings are shrinking: “EBITDA declined over 60%+ Y/Y vs. downapprox 57% Y/Y in Q1; this marks one of the biggest declines we’ve seen in years.”
• And earnings will continue to shrink in the near-term: The company lowered its EBITDA guidance for the rest of the year.

AOL posted a five percent ad increase for the June quarter, and did much better with its key display-ad category, notching a 14 percent increase. That follows a four percent increase in display ads the previous quarter, when the company first showed signs of life.

Which makes it even odder for Armstrong to have swapped out his top sales guy last month, but we can come back to that later.

For now: The sales bump still didn’t allow Armstrong to record a profit. AOL’s subscription revenue continues to dwindle away (though more than three million people are still paying it to connect to the Internet) and the company is continuing to plow money into initiatives like its Patch local play. So AOL posted a net loss of $11.8 million and an operating loss of $5.8 million on revenues of $542 million.

In its earnings release, AOL took pains to point out that it was benefiting from the acquisition spree it went on during — and which culminated in — the $315 million Huffington Post deal earlier this year.

The company said its network ad business grew 29 percent, and that half of that increase was due to its purchases of 5min and goviral, two video ad start-ups. And AOL said premium display ad revenue had increased 18 percent, “a portion of which is attributable to our acquisitions of The Huffington Post and TechCrunch.”

So far, Wall Street is profoundly unimpressed with the results: AOL shares were down by more than 15 percent in the first hour of trading today, even as the broader market ticked up after a brutal couple days.

In a brief interview following the company’s earnings call, I asked Armstrong why he thought the market was punishing him, and he said he hadn’t been watching the ticker this morning.

But if AOL’s performance didn’t mirror the overall market, he said, “that would be hard to comprehend, based on the fact that we pretty much have turned the company into a growth company in the past two years.”

Mr. Armstrong announced last week that Mr. Brody would replace Jeff Levick as president of AOL advertising and will become chief revenue officer, too. Mr. Brody previously oversaw AOL’s advertising and publishing technologies, a role in which he rarely met with major advertisers. The move was part of a broader shake-up at the company, which has been struggling to grow its ad business for years.

Many senior digital-ad executives said they hadn’t heard Mr. Brody’s name until last week. “I didn’t know him at all. He’s a new face,” said Quentin George, chief digital officer at Interpublic Group of Cos. media-buying unit Mediabrands.

Read the rest of this post on the original site »

Other departures include two recent hires: Lauren Hurvitz, brought on last fall to run PR; and HR head Kathy Andreasen, who joined at the same time.

Unlike the last round of body-moving at AOL, this one doesn’t seem to be prompted by the company’s acquisition of Huffington Post; unless I’m missing something in Armstrong’s memo to the staff, published below, no power seems to be shifting to Arianna Huffington or her team.

[UPDATE: An AOL insider posits that the "streamlined GM structure" Armstrong describes in his memo is indeed reflective of Huffington's wishes, noting she "hated" the existing AOL corporate architecture which featured many middle managers.]

It’s not a shock to see Levick leave: The gripe about him from the ad sales industry is that he’s not really an ad sales guy but a brainy analytical type. The problem, according to this line of thinking, is that a huge component of the ad business, even the digital ad business, is still about charisma and a firm handshake — the kind of qualities that Armstrong uses to great effect.

The more positive spin is that Levick has helped turn around AOL’s once-decimated sales operation over a long two-year slog, and that he should feel like he accomplished quite a bit. The company’s last earnings report, in fact, contained a modest surprise, with display ads moving up four percent (overall ad revenue was still down).

But if AOL sales are finally moving in the right direction, why change things now? I just got off the phone with Armstrong, who gave a non-answer about “the opportunity in front of AOL” being so large that it compelled a move: “I feel like our job, specifically my job, is to make sure we make very good long-term decisions about what makes us strongest in the marketplace.”

From: Armstrong, Tim
Date: Mon, Jul 25, 2011 at 11:12 AM
Subject: Important Changes at AOL
To: All AOLers

AOLers –

As we continue the comeback of AOL we are focused on growth. We have a few announcements today that will make the company simpler, faster and stronger. Our strategy remains clear and consistent and our execution and operational clarity have improved. We have stabilized the foundation of the company and our future is about executing our growth strategies focused on:

1. Leading the digital content space
2. Leading the brand advertising space
3. Leading the premium video platform space
4. Leading the local content and advertising space
5. Leading the online membership services space

As we have focused our growth in this simplified product portfolio, we are now combining our advertising sales organization with our advertising network and products organization. We are not watching trends in the advertising business, we are creating them. Project Devil has traction and will help lead the brand space online. In the video space, we have gone from being out of the race to becoming one of the largest forces for digital video distribution.

The first announcement is a global structural change to our advertising business. We are promoting Ned Brody to the new position of Chief Revenue Officer and President of AOL Advertising. Ned will oversee AOL’s global O&O advertising, global network business, sales, and advertising and publishing products. There are three goals we are hoping to accomplish with Ned in this new position. The first is a unified premium strategy for advertisers and publishers. The second is consistent growth in advertising spend across all our properties and networks. The third is a more rigorous approach to advertising and publishing system design. This will allow us to connect Project Devil and our Premium Brand Formats to the O&O properties as well as the network.

In addition to our new CRO position, we are also announcing expanded leadership roles for five world-class leaders in our sales organization. Tim Castelli, Wendy MacGregor, Tim Richards, and Jim Norton will be promoted to SVP and Michael O’Connor will be promoted to VP, Head of Sales Operations. These leaders along with Don Kennedy, SVP of Advertising.com Sales, and Chris Heine, SVP of Advertising Operations will form our sales leadership team and join Ned’s management team.

As a result of this global change, Jeff Levick will be leaving AOL after a six week transition period. Jeff undertook one of the toughest jobs in the Internet space when he joined AOL. In the past two years, he developed a world-class leadership team, led the industry toward the future of premium formats for brand advertising, and helped lead a game-changing shift in perception and quality of the AOL advertising experience. Jeff is a friend to many of us and we know we will see big things from him in his future career. We have been working closely together on the design of the sales structure and we both believe it will positively impact results for our team and our customers.

The second announcement we are making is a streamlined GM structure reporting directly to me, overseeing the connection between content and monetization. The GM organization will allow us to profitably manage our investments in media and optimize the yield opportunities with traffic and revenue. We have already put the following GM leaders in place:

• AOL.com – Chris Grosso
• Huffington Post – Brian Kaminsky
• Entertainment – Kerry Trainor (e.g. Moviefone, AOL Music)
• Marketplace – Jay Kirsch (e.g., AOL Autos, Finance, and AOL Industry)
• Tech – Heather Harde (e.g., TechCrunch, Engadget)

Our third announcement is aimed at streamlining our corporate operations. Artie Minson, CFO of AOL and President of Paid Services, will now take on managing both our international planning and our Google search relationship, which is an important partnership on many levels. As part of Artie’s new responsibilities, he will be transitioning HR, Corporate Communications, and Marketing back to me.

We will be consolidating all marketing functions and the corporate communications team into a single organization run by Maureen Sullivan. Lauren Hurvitz will transition out of AOL as part of the consolidation. Kathy Andreasen is also transitioning out of the company. Lauren and Kathy have been big champions for AOL and trusted members of the management team. Sandy Mott will assume the role of interim head of HR. We will also be opening up a search for a Global Head of HR.

The future for AOL is getting brighter and we are on the path of returning AOL to growth. I care about our team and our AOL brand, our consumers and customers, and our long-term outcome – the announcements today have this at the core.

We have very clear operating plans for the second half of the year as we reviewed on the all-hands call a few weeks ago and we review detailed updates every week, and in some cases daily. We won’t be hitting the pause button this week, we’ll be on fast-forward.

I will be holding an all-hands call with the sales team today at 12:30pm ET to further address these changes and more fully address Jeff’s contribution to AOL.

We have an unprecedented opportunity everyday to positively impact consumers’ lives and our customers’ businesses. Let’s go make it happen – TA

Here’s an internal memo, titled “Platform for Growth,” just sent out by AOL CEO Tim Armstrong, in which he buries the lede by noting the business partner of content czar Arianna Huffington, Jon Brod, will move to work on its local Patch effort and MapQuest mapping unit full time.

General managers previously reporting to Brod will now report directly to Armstrong. Brod came to AOL from its acquisition of Patch, which Brod ran.

Second, AOL also elevated an exec as Chief Analytics Officer and head of something called Project Management Organization.

And, the company has further simplified its branding structure by moving some of its brands under the Huffington Post Media label, which it had already talked about doing. It’s essentially a streamlining of a previous streamlining.

Here is the email:

From: Tim Armstrong
Date: Tue, 28 Jun 2011 08:29:19 -0400
To: Tim Armstrong
Subject: Platform for Growth

AOLers –

We spent the last week in France at the Cannes Lions Festival, which is a global meeting of the advertising community (the technology industry has CES and Cannes is becoming the “CES” of global advertising). After finishing Investor Day and the global company meeting two weeks ago, the trip to Cannes further underlined the opportunity we are starting to take advantage of — that content and brands are the next wave of the Internet.

Content, Brand Advertising, Video, and Local are going to be at the center of the web and mobile for the next decade and we have made bold moves to position AOL at the forefront of those areas. We have a powerful portfolio of assets as a company and by matching our people, brands, and marketplace-defining products, we will simply get stronger, better and faster.

We are going to further strengthen our content brand portfolio to put maximum leverage into key areas of growth. We are also investing in the leadership structure of the brands and the overall analytical framework we have as a company.

The brand portfolio simplification and investments we are announcing today come from our core strategy, the metrics of growth we see in the business today, and the expanding opportunities we see in the marketplace. Every brand metric was thoroughly reviewed and thoughtfully discussed to get to the list we are sharing with you today. There are a set of brands we will continue to run as stand-alone brands because they have built strong organic traffic, significant customer bases, and unique market positions. There is another set of brands that will gain usage, a larger customer base, and deeper content by becoming part of the Huffington Post platform.

We want to make this transition as simple and intuitive as possible for employees, consumers, and advertisers, so we’ve set up a link to the brand site to review the complete list of brands and USPs.

The AOL Huffington Post Media Group technology platform is the end result of a company wide effort combining the very best content, video, ad, and data technologies from the Blogsmith platform with the best technologies from Huffington Post platform — and we’ve been hard at work adding many new capabilities as well. This combined platform simply has no equal in the digital content space and features an innovative approach to coverage, with edit and tech teams working closely together, and a “hyper-efficient editor” model that enables editors and reporters to rapidly deploy all the tools available to create and disseminate stories. We have integrated in 5min video, AOL demand analytics, and AOL’s data platform deeply into the system, and we will soon be running all of the advertising through AOL’s ad platform. Editors are not silo-ed but empowered to quickly bring their stories to life — and to millions of readers. This leads to engagement on a massive scale, creating an editorial ecosystem with high-quality content, leading edge blogging, commenting, and social sharing capabilities that are easily scale-able and enable real-time speed and a more holistic approach to covering news and engaging audiences.

Here are some quick statistics on the benefits we are seeing in combining sets of brands and platforms:

· When we migrated AOL News to the HuffPost platform we saw significant increases in organic traffic with search entries per UV increasing 195% and social entries per UV up 142%.
· By combining Politics Daily with HuffPost Politics content, social interactions, which include HuffPost comments, FB comments, shares and re-shares, FB Likes, tweets, re-tweets, and email shares reached 3.3MM.

· Adopting Huffington Post style blogging in the Patch platform allowed us to sign up 5,000 bloggers in 2 weeks.

The goals of the brand and platform investments are the following:

1. Grow traffic and grow revenue with high quality experiences for consumers and advertisers
2. Be the leader in content CMS and CMS for Ads (Devil + Social)
3. Simplify the business process and increase profitability in each vertical area
4. Scale video and International
5. Create a culture of speed and transparency on all fronts

In support of the brand investments, we are also making people investments. The current GM structure around the content brands will report to me and I have met with all the GM’s to discuss each vertical opportunity. Local will be broken out as a vertical and is a space where AOL is in a leadership position. Jon Brod will focus full-time on AOL’s local efforts, including Patch and Mapquest. Jon is the co-founder of Patch and has spent the past few months successfully integrating the Huffington Post and AOL media. AOL local has a lot of exciting products coming out this summer and we will be connecting many of those products to our larger business.

We are also announcing a new position that will have a positive impact across AOL — the formation of a Chief Analytics Officer and Project Management Organization (PMO). Tim Lemmon, currently working in Ned Brody’s Advertising.com Group, is being promoted to CAO, reporting directly to me, and will oversee and drive analytics and project management on a company-wide basis. Data and analytics are key to our success and we will continue to look for Tim to provide fact-based guidance and executional focus for all of AOL. Tim’s current AOL Analytics team including Pricing and Yield Management will continue to report to him.

I’ll be holding a working meeting today at 11am EDT with the Sales team to discuss the new brand structure, the HuffPost platform, and the supporting org structure. The meeting information is available on AOL Today and anyone is invited to dial in if you are interested in learning more. Go AOL! -TA

Talking to AOL CEO Tim Armstrong earlier this week about its investors day tomorrow, he used the word “execution” a lot.

No, not the kind evoking a firing squad if he did not succeed at turning around the New York-based Internet giant soon as he has long promised.

Instead, Armstrong was referring to reassuring big shareholders and Wall Street analysts that AOL was now in a mode of making sure all its many moves to turn around the company will finally begin to pay off.

“Basically, our point is going to be about fully operating around the strategy we’ve built,” said Armstrong in a wide-ranging interview. “It seems right for investors to ask about executing on what we have been doing for the last year and a half.”

It’s certainly the right message for the charismatic executive to be delivering, as he and other top AOL execs present their plans moving forward, especially after what has turned out to be a very hyperactive year.

After deep layoffs, a massive rejiggering of its management ranks and a number of shifts of its business focus, without much advertising increase to show for it yet, Armstrong has also pushed through a series of acquisitions.

It culminated in the high-profile and decidedly dramatic purchase of the Huffington Post in January for $350 million in cash.

Now, said Armstrong, deals will be taking a back seat to products.

“We are diligently staying on strategy and really focusing on products and services,” said Armstrong. “We have laid out the path we are on and now investors want proof of the concept.”

To Armstrong, that means the push of “branded content” and a continued focus on significant properties in key topic areas.

Tomorrow, in news that could worry investors, AOL will be noting that traffic is flat year over year, but explaining that it is due to the outsourcing of its sports and health sites.

“If you added that back in, we would have had a phenomenal year of growth,” said Armstrong. “Our main point will be that this is the right path for AOL.”

In fact, in an unusual wording, he said AOL was betting on the “urbanization” of the Web around big branded sites, which is, in many ways, exactly where the Web was a decade ago with Yahoo, Excite and others.

But Armstrong will be making the point that this retro idea is perfect for today, as marketers look for quality content that attracts big audiences, which has seen its most energetic application in the Huffington Post.

Thus, his linchpin remains the flashy news site’s even flashier co-founder Arianna Huffington, who has cut a very wide swath through AOL’s content efforts since Amstrong made her media czar of the company.

As Armstrong did, she also stressed the focus on unique visitors and ad growth, more video and a laser focus on local.

This includes shoving editorial into every AOL property, including unlikely ones such as Moviefone and MapQuest, and integrating it all to point back to the Huffington Post mothership.

“Much better editorial integration is a centerpiece of what we are doing, surfacing content in new places it was not before,” said Huffington, who used examples of local stories via its Patch unit that have gone global with a special push.

And by global, that also means the creation of new content sites in Europe and elsewhere, in order to build this unusual dream of a fully aggregating world.

“It is a big test of the HuffPo platform aggregation to do this,” said Huffington, who has clearly longed for the kind of money and staff to do this for a very long time. “It has moved a lot faster than I thought it would … but it feels good to be moving on so many fronts at once.”

Many fronts indeed, which might make investors pause. So far, those shareholders have had a continued wait-and-see attitude toward AOL, which has seen its stock decline almost 13 percent from its late 2009 IPO debut.

That’s mostly due to worries about whether the continued and expected fall-off of its lucrative access business can be met by similar increases in its ad business.

That share drop has been especially steep since the beginning of the year, but it has also not been drastic, indicating an interest in continuing to believe Armstrong’s confident — well, confidently delivered, at least — narrative.

As Citi’s Mark Mahaney wrote in a one-hand-other-hand note yesterday about the investor day:

Positives: 1) AOL still remains a top 5 U.S. Internet property; 2) In the latest quarter, AOL’s Display segment grew Y/Y for the first time in ~3 years, and this improvement seems sustainable; 3) At 4x ’11 EV/EBITDA, AOL’s valuation is among the lowest of any ’Net Stock. Negatives: 1) Deteriorating fundamentals; 2) Significant market share losses — ’Net usage, Display Advertising revenue & Search queries; 3) A significant profit hole from the structural decline of its Subs biz; 4) Substantial competitive risk; and 5) An unproven (@ AOL) management team.

“We all like Tim and what he says makes a lot of sense,” added one big investor, who is also attending and has many questions about the efficacy of what AOL is doing, in a common sentiment among its large shareholders. “But we also need to see real results soon.”

Or at least part of it did: Display ads were up four percent for the first quarter–the first time that number has moved up since 2007.

Overall ad revenue was down 11 percent, because AOL’s international and search ads are still shrinking. And AOL’s display numbers still lag the rest of the Web industry. But those numbers are all better than Wall Street expected, and any turnaround is a turnaround for Armstrong, who has been preaching patience since he came aboard from Google two years ago.

The key number to look at for AOL is its domestic display results, which grew 11 percent. Factor out the effect of its HuffingtonPost acquisitions and other buys, and that number is still up six percent. AOL says it’s been able to do that because it has finally overhauled it sales force and strategy, which has the site trying to sell fewer ad units for more money.

AOL overall revenue dropped 17 percent, and net income dropped 86 percent. The revenue drop is expected as AOL’s dial-up business fades away (but there are still 3.6 million people paying an average of $18 a month!), and expenses from its acquisition binge (and subsequent layoffs) cut into profits.

Armstrong and company are taking a modest victory lap on their earnings call right now; I’ll update if needed.

AOL CEO Tim Armstrong has certainly had a very busy year, from the continued massive restructuring of the troubled Internet portal to ziggy-zaggy strategic shifts in content and advertising to a series of frenetic acquisitions, capped by the $315 million purchase of the Huffington Post earlier this year.

Also, let’s not forget all those fabulous appearances with the mediagenic Arianna Huffington.

So, it was nice to get Armstrong to calm down for a minute–before he headed off for an off-site in Half Moon Bay, Calif., with his senior staff–and talk about how AOL plans to digest all those things.

That’s especially important, since Wall Street is still wondering about that, too. A lot, in fact, with AOL shares down 29 percent year over year, which is not exactly a shining endorsement by investors of Armstrong’s tenure.

Presumably, he’ll be explaining it all when the company reports its first-quarter earnings in a week, on May 4.

Until then, here’s his video interview with BoomTown:

]]> http://allthingsd.com/20110426/aols-hyperactive-ceo-tim-armstrong-talks-about-whats-next/feed/ 4 http://allthingsd.com/20110422/will-yahoo-be-in-play-again-heres-a-few-scenarios-that-could-be-more-than-just-scenarios/ http://allthingsd.com/20110422/will-yahoo-be-in-play-again-heres-a-few-scenarios-that-could-be-more-than-just-scenarios/#comments Fri, 22 Apr 2011 17:58:51 +0000 Kara Swisher http://kara.allthingsd.com/?p=42995

One of the results of Yahoo’s weak earnings report earlier this week has been the renewal of chatter about possible changes in its leadership and even ownership.

And continued investor discomfort with its troubled stock price–Yahoo shares are down 7.25 percent year over year and an astonishing 49 percent on a five-year basis–and the level of renewed grumbling by major institutional shareholders is causing some key players to go back to their PowerPoints to reevaluate various options.

(By way of contrast, Google is down about 4.5 percent year over year–largely due to last week’s earnings release with higher than expected expenses–but still up more than 20 percent for the five years.)

As many might recall, last year Yahoo was under scrutiny by a number of interested parties–from big media companies to other digital players to private equity firms–considering a number of takeover scenarios.

Most of them were just talk and no action resulted, but that did not mean that interest went away.

The truth is, they are still out there and ruminating–this time with what sources describe as a much more amenable Yahoo board, with several of its key members willing to entertain any legitimate offers or ideas to improve the Silicon Valley search giant’s prospects.

In the last go-round, by contrast, Yahoo’s top execs–including CEO Carol Bartz–denied any interest in the swirl of rumors related to a variety of ideas.

That’s definitely changed–at least at the board level–so here are three very credible scenarios of what could happen:

Peetie, Peetie, Yahoo-Sweetie

Late last year, BoomTown wrote a post about the interest that former News Corp. COO and President Peter Chernin–who now owns his own entertainment production company–had in the situation at Yahoo.

As I wrote in November:

But multiple sources from a variety of sides said that Chernin, a well-liked and deeply experienced media and entertainment exec, has been contacted by a number of private equity firms and other investors about his interest in becoming involved should any of the various and sundry scenarios around the Internet giant pan out.

And Chernin, many sources said, has expressed a definite interest in the situation, perhaps because he was deeply involved in a previous deal when running News Corp.

At the time, it involved combining the media giant’s Myspace social networking site with Yahoo and also Microsoft’s portal MSN and creating a new company, code-named “TrafficCo.”

Indeed, that interest remains for Chernin, who has also been an increasingly active investor, including in the digital sector. He is an angel funder of the hot social media app start-up Flipboard, and also just joined the board of the popular Pandora music service.

The most likely possible scenarios have him joining with deep-pocketed partners, including Providence Equity Partners and, yes, Microsoft, as well as investment banks or advisory firms, such as Morgan Stanley and Code Advisors.

The approach being considered–which would only be done in a friendly way, with the cooperation of Yahoo’s board–would center on making a large enough investment in its shares, allowing the group to take control of the management and the board, putting Chernin in as chairman and maybe CEO (or with a new CEO–see next section).

If Microsoft were involved–and Chernin has strong ties there–such a scenario might include folding all its online properties into Yahoo and renegotiating its rocky search partnership, too.

This is an idea that intrigues a lot of people–including current Yahoo board chairman Roy Bostock, co-founder Jerry Yang and other board members–who have indicated recently to several investors and dealmakers a willingness to listen to credible player such as Chernin.

But, in this scenario, it would be up to Chernin and his partners to make a prosposal, said sources, and he might decide that the complexity of getting the power to make big changes at Yahoo is too big to tackle.

In addition, Chernin remains a successful Hollywood player, with several major television and movie projects in the works, as well as big investment possibilities in Asia.

“Does he want the headache of Yahoo at this point in his career?” asked one person, among many Chernin has talked to recently about becoming involved in the company. “Would you?”

Maybe so, if it would provide a big financial windfall. Many think an exec with a reputation like Chernin’s could easily begin to move Yahoo’s moribund stock upward quickly.

ABC (Anybody But Carol)

Here’s one truth: Yahoo CEO Carol Bartz does not get proper credit for a number of moves she has made since coming to the company two years ago, including cleaning up the messy corporate structure, de-complexifying garbled systems, cutting costs and bringing its far-flung operations into line.

Yahoo’s stock is certainly doing better than when she arrived in early January of 2009, when it was in the $12 range compared to its current $16 price point.

But here’s another: That stock price now includes more than $10 in solid assets–cash and Yahoo’s much more valuable stakes in China’s Alibaba Group and Yahoo! Japan–leaving very little true share appreciation.

And here are more truths: Bartz’s inability to get revenues growing, innovations flowing, promising start-ups acquired and–most importantly–to stop the continual exodus of talent out the door of Yahoo has made her tenure shakier than ever.

Add to that making its relationships with Asian partners more tense, almost no traction in key mobile, video and social arenas, a record of loud public declarations that have fallen flat and serious troubles in Yahoo’s search and online partnership with Microsoft–a deal Bartz struck and is charged with managing–recently highlighted in Yahoo’s earnings earlier this week.

As shareholder activist Eric Jackson, who has long agitated for change at Yahoo, wrote this week in a post:

“The truth is that investors are fed up with Bartz. Their enmity towards Bartz is palpable when you talk to them. Bartz talked a big game coming into the job and she hasn’t delivered. It’s that simple.”

Well, not that simple and maybe not fair, but it’s also clear that no one thinks Bartz will be re-upped when her contract is up in 18 months.

Thus, it’s no surprise that ideas of other possible leaders of Yahoo are being contemplated now.

Here’s the short list I have made of my choices: Akamai President and Yahoo board member David Kenny; former Microsoft exec and current Juniper Networks CEO Kevin Johnson; former AOL CEO and current News Corp. digital head Jon Miller; and Nikesh Arora, current Chief Business Officer and sales head at Google.

There are plenty more to pick from, of course, and any could be installed in conjunction with an effort such as Chernin’s.

AOL Under the Hoop

No good Yahoo scenario plotting can be contemplated without including AOL and its flashy CEO Tim Armstrong.

Armstrong has made no secret of wanting to get ahold of Yahoo properties to apply the strategy he has been trying at AOL to get it moving again.

Which is: To become the premiere digital media company.

Which is actually Yahoo’s new motto–although arguably, in word and deed, Armstrong has been much more active in pushing the concept and narrative.

That includes his incessant acquisitions of all kinds of online media properties, including the big fish–the $315 million purchase of the Huffington Post and the coronation of its even-flashier co-founder Arianna Huffington as content chief.

Armstrong has certainly not been averse to the idea of a Yahoo-AOL hookup with him at the top, and has been actively talking to anyone interested in such a deal.

And things could get a lot more interesting if AOL linked with a bigger strategic partner, such as News Corp. or Disney or even Google, Armstrong’s former stomping grounds.

Still, wishing does not make it so, especially with a much smaller and weaker set of assets than Yahoo and a still poor record on goosing its advertising sales.

AOL’s stock is down 30 percent year over year, as investors still worry about Armstrong’s ability to turn the company around, which kind of puts him in the same situation as Bartz.

“AOL is waiting under the hoop for whatever happens, which is a good place to be,” said one person close to the situation. “Why not?”

Why not, indeed–so, let the games begin.

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