Check Out Our New Look

AOL Shifts Patch Local News Service To Joint Venture With Hale Global

By | Wednesday January 15, 2014 @ 1:36pm PST

Turnaround company Hale Global will operate and own a majority stake of Patch, or at least what’s left of AOL chief Tim Armstrong’s dream to create a powerful network of local news Web sites. TAOL new logohe companies say that they are “committed to re-launching Patch.” But instead of depending on journalists for news it will become “an efficient platform that allows citizens and businesses to create and share locally-themed news and content.” Patch consists of more than 900 sites and serves more than 16M people a month. Hale CEO Charles Hale says that the partners will take “the necessary steps to ensure Patch remains a vibrant part of the community.” What does that mean? Here comes the AOL jargon: It says strategies include “Technology solutions to make community participation seamless; Mobile-first experience with social integration; National, regional, and local advertising self-service tools; [and] Geo-targeted advertising products.” The companies wouldn’t disclose the financial terms for their partnership deal, which they expect to close by the end of March. Armstrong says that AOL makes “bold bets” and local advertising “will be a growth space during the next decade of the Internet.” But Patch didn’t pay off the way he hoped. AOL took a $25.0M impairment charge and a $19M restructuring charge on the operation in Q3 after laying off 40% of its workforce — about 480 people — in August.  Armstrong helped to found Patch in 2007. Shortly after he became AOL’s chief … Read More »

Comments (2)

AOL Slashes Staffing At Its Patch Local News Services

By | Friday August 16, 2013 @ 9:00am PDT

This was the shoe everyone was waiting to hear drop as AOL chief Tim Armstrong abandons his ambition to blanket the country with web sites offering hyper-local news. He told staffers at his Patch network of news destinations that 40% of them — about 480 people — will be laid off, media watchdog Jim Romenesko reports. AOL will continue to operate 60% of the sites. It will join partners to keep 20% open, and another 20% will either be consolidated or closed. “The people leaving Patch have played a significant role in making Patch an integral part of the communities it serves – and we thank them for their hard work and passion for Patch,” the company says. Today’s announcement comes about a week after Armstrong committed a colossal PR blunder by coldly firing Patch creative director Abel Lenz in the middle of a public meeting. The CEO later admitted it was a “mistake,” but excused his bullying as an “emotional response at the start of a difficult discussion dealing with many people’s careers and livelihood.” Armstrong helped to found Patch in 2007. Shortly after he became AOL’s chief executive in 2009, the company paid about $7M to acquire it. He also invested heavily in the operation, calling community-level advertising “one of the largest commercial opportunities online that have yet to be won.” As losses continued Patch shifted its focus away from journalism. Armstrong told analysts last … Read More »

Comments (4)

AOL Intensifies Effort To Lure Advertisers From TV With New “Programmatic Upfront”

By | Wednesday July 24, 2013 @ 6:00am PDT

AOL and other web video providers showed with their NewFront presentations — timed to coincide with the TV networks’ upfronts in May — that they’re serious about trying to siphon ad dollars that typically go to broadcast and cable networks. Now AOL’s Tim Armstrong says he wants to take the next step by introducing the AOL Networks Programmatic Upfront on September 23, designed to become an annual event. The term “programmatic” refers to display ads that companies including Google and Yahoo sell in auctions, typically handled just by computers. The problem: “The online advertising industry has created a fear and chaos-based environment filled with hundreds of small companies each pitching highly technical necessities” for advertisers to reach audiences, Armstrong says in a blog post this morning. “They can’t shift their budgets from TV until we — as an industry — demonstrate the true power of digital to unlock creativity.” AOL’s “Programmatic Upfront” will feature marketers and agency execs explaining why advertisers should “pre-allocate media budgets against large scale display inventory,” he says. This market is growing fast: Advertisers are expected to spend $3.36B this year on real-time bidding, and eMarketer forecasts that it will grow to $8.49B in 2017, accounting for 29% of digital display spending.

Comments (0)

AOL Slows Revenue Decline In Q2 As Ad Sales Grow

By | Wednesday July 25, 2012 @ 4:17am PDT

AOL Earnings Q2 2012You look for good news where you can find it. And for AOL, it’s in a 6% increase in global ad sales in Q2 — and the $1.1B it received from its patent sale to Microsoft. That jolt of cash enabled the Internet company to report Q2 net income of $970.8M vs its $11.8M loss in the period last year, on revenues of $531.1M, -2%. The revenue figure beats the $519.4M that analysts expected. Wall Street forecast earnings per share to come in at 10 cents a share; AOL’s reported figure — $10.17 — includes the Microsoft cash and isn’t comparable. But if you dig into the report, the company says that the unusual items added $9.94 to the EPS. Do a little subtraction, and you get EPS of 23 cents, well above the consensus. Along with the extra funds, AOL says it spent $8.8M on its recent proxy fight, $7.6M to settle a Virginia tax matter, and $5.6M in costs related to the patent sale. While AOL saw strong growth in sales of display ads overseas, in the U.S. display was flat and search and contextual ads were -1%. Subscription revenues fell 13% to $175.3M as the number of people buying AOL’s domestic Internet access service declined 3% vs the end of Q1 to 3.0M. CEO Tim Armstrong says the latest report is a “significant milestone” because it’s the first time … Read More »

Comments (0)

AOL Says It Will Use Proceeds From Patent Sale To Repurchase $400M Of Its Shares

By | Thursday June 28, 2012 @ 5:36am PDT

CEO Tim Armstrong is following through on his vow to give back to shareholders all of the $1B+ that Microsoft recently paid for more than 800 AOL patents. In addition to previous share repurchases, the company says the new arrangement means it plans to return $1.1B this year to its investors. Reducing the number of shares “at attractive prices underscores both financial prudence and our significant belief in the opportunity in front of AOL,” Armstrong says. The sale will be conducted as a so-called modified Dutch auction, giving shareholders opportunities to sell their holdings at anywhere from $27 to $30 a share — although in the end everyone will receive the same price. If the offer is fully subscribed, then AOL’s repurchase could amount to as much as 15.8% of its outstanding shares. The stock closed yesterday at $27.31 and is up nearly 4% in pre-market trading. AOL says that it has to return the $1B from Microsoft in multiple stages to avoid a big tax hit. Allen & Co is managing the sale.

Comments (1)

Cable Execs Warn That Dish Network’s Ad-Zapping DVR Could Lead To Higher Costs

Cable Show DVRBroadcasters received moral support this morning from cable in the looming battle against the new Auto Hop feature on Dish Network‘s Hopper DVRs, which enables the machines to automatically recognize and skip over ads on recorded shows. “In the end a technology like that could create real carnage for the industry,” Discovery Communications CEO David Zaslav said in a panel opening this week’s annual Cable Show. And he put Dish Network’s Charlie Ergen on notice that his programming costs could soar if he continues to sell the ad-zapper. “He needs our content,” Zaslav says. “If there isn’t going to be advertising, then there needs to be a lot higher subscriber fees.” He says the pay TV industry needs to be “disciplined” to protect the current system built around ads and subscriber payments. Time Warner Cable CEO Glenn Britt said that in the long run it could hurt consumers. “Either subscription prices are going to go up or there’s going to be less content made,” he said. “Destroying the revenue isn’t going to have the effect people think.” But AOL chief Tim Armstrong said that Dish’s initiative puts more pressure on advertisers and media companies to develop commercials that people will want to watch. “The reality is you have a superengaged consumer,” he says. “How do you make more engaging advertising tied to how people are using the media?” He urged pay TV providers to recognize … Read More »

Comments 22

UPDATE: AOL Chief Laments Proxy Fight “Noise” After Beating Q1 Forecasts

By | Wednesday May 9, 2012 @ 4:43am PDT

AOL Q1 2012 EarningsUPDATE, 6:35 AM: ”I don’t see a resolution on the horizon” in AOL‘s battle with activist investor Starboard Value, CEO Tim Armstrong told analysts this morning. The hedge fund, which owns 5.3% of AOL shares, is waging a proxy fight as it attacks Armstrong initiatives including his investment in the Patch local news service and acquisition of the Huffington Post. Starboard is challenging the company’s nominated slate of directors with three of its own candidates — including Starboard CEO Jeffrey Smith — for the election that will take place at AOL’s annual meeting June 14. “We feel pretty good about our position in that,” Armstrong says. But he adds that it’s “not helpful to have a lot of noise around our content business” just as AOL enters the upfront ad-buying season. He urged investors not to “mistake that noise for what we’re doing.” Read More »

Comments (1)

AOL Dissident Investor Says $1.1B Patent Sale Doesn’t Solve Operational Problems

By | Tuesday April 10, 2012 @ 7:56am PDT

AOL chief Tim Armstrong probably knew that Starboard Value’s Jeffrey Smith — who controls 5.3% of the shares — wouldn’t fold up his tent after yesterday’s deal with Microsoft, which resulted in a 44% pop in the stock price. The dissident shareholder, who lobbied for a patent sale, says today in a letter to the board that he’s “pleased” the company took the “meaningful first step in unlocking value for AOL shareholders.” But Smith adds that the deal “does little to address our serious concerns with the Company’s poor operating performance” including its losses in display ad sales which Smith pegs at $500M a year — including $150M for the Patch local news service. ”Patch is an unproven and, thus far, unsuccessful business model that is draining valuable resources from the Company,” Smith says. He’s also wary about Armstrong’s plans for the cash that AOL will have after it completes the patent sale to Microsoft; it will amount to $1.4B, or $15,35 a share. Although the CEO promised to return a “significant portion” of the proceeds from the sale to shareholders, Smith asks: “Why wouldn’t the Company simply return all of the proceeds?” He fears that AOL will use some of the money for ”poorly conceived acquisitions and investments into money-losing initiatives like Patch.” Smith says he’s preparing to disclose some candidates that he’d like to see elected to the AOL board.

Comments (2)

AOL’s Tim Armstrong Touts Patent Deal, But Slams NYT: Video

Anchors on CNBC’s Squawk Box joked about how quickly the AOL chief executive made it to their studios to crow about this morning’s $1.1B patent deal with Microsoft — which sent AOL shares soaring. “This is not a home run. It’s a grand slam,” Armstrong says promising to return “as much of the cash as possible” to shareholders. But he also took a shot at The New York Times for apparently having been spun last week: The paper was fed an exclusive story that said Huffington Post’s Arianna Huffington ended up with “more authority” at AOL in a new reorganization. “We probably could do a better job with the accuracy of that report,” Armstrong said adding: “This isn’t Dallas.”

Comments (1)

AOL Chief Tim Armstrong Inks 4-Year Contract With Perks To Boost Stock Price

By | Friday March 30, 2012 @ 3:29pm PDT

The agreement guarantees him an annual base salary of $1M, and a target annual incentive bonus of $2M. In contrast to his previous deal, from 2009 when AOL was still part of Time Warner, the new terms provide fewer benefits ”including a reduction in the amount of cash severance benefits, the payment of cash severance benefits over time rather than in a lump sum, and the elimination of supplemental life and disability insurance benefits,” the company says in an SEC filing. But Armstrong’s stock options give him a chance to score big if AOL’s price rises: Half of the options vest when the 20-day average stock price rises at least 20% from the average in the 20-day period before he receives his grants. He can score the other half when AOL’s stock prices stays up at least 30%. He’ll also receive stock if AOL meets unspecified targets for its shares in the period from the beginning of this year to the end of 2014. One of AOL’s largest shareholders, Jeffrey Smith’s Starboard Value, has been hammering the company to take actions that might increase its market value. AOL shares are -3.5% over the last 12 months.

Comments (2)

AOL Should Divest Moviefone And MapQuest Dissident Shareholder Says

By | Friday March 30, 2012 @ 8:49am PDT

UPDATE, 11:05 AM: AOL changed its mind and just released a statement in response to this morning’s letter from Starboard Value’s Jeffrey Smith. Looks like Moviefone and MapQuest won’t be shopped around: “We are continuing to work on the comeback of AOL and have a plan that is beneficial for employees, customers and shareholders. We believe strongly that all of our brands are important to our brand portfolio. We will continue to update investors as we execute on our plan.”

PREVIOUS, 8:49 AM: AOL isn’t commenting this morning on the latest missive from activist investor Jeffrey Smith, who says that the Internet content and access company has failed to deliver for shareholders. Smith’s Starboard Value owns 5.2% of AOL — and he’s proposing a slate of five candidates, including himself, for its board. Today he kept the pressure on with a public letter to directors urging them to stop postponing the company’s annual meeting, and to unload underperforming properties including Moviefone and MapQuest.  AOL paid $525M for Moviefone and $1.1B for MapQuest in 1999. ”These prices are likely well in excess of the current market value of these assets,” Smith said so a sale could generate Net Operating Losses that AOL could use to reduce its taxes. He also applauded reports that AOL has hired Evercore Partners to explore the possibility of selling the company’s portfolio of patents for Internet processes in areas including e-commerce, travel navigation, and search-related advertising. CEO Tim Armstrong has likened them to “beachfront property in East Hampton.” But Smith says the company should treat a potential sale with “a sense of urgency due to the relatively short remaining lives of some of the material patents.”

Read More »

Comments (2)

Will AOL Sell Its “Beachfront” Patents?

By | Saturday March 24, 2012 @ 2:16pm PDT

The company’s thinking seriously about it — so much so that it hired Evercore Partners to explore a sale of more than 800 patents and consider other strategic options, Bloomberg reports citing “three people with knowledge of the situation.” They also tell the news service that private equity firms Providence Equity Partners, TPG Capital and Silver Lake are trying to interest AOL in a plan to go private. The news about the patents follows CEO Tim Armstrong’s comment at an investor conference two weeks ago that AOL’s portfolio is like “beachfront property in East Hampton.” He added that “when we were spinning out of Time Warner this was a huge negotiation.” The patents involve a wide range of Internet-based activities in areas including e-commerce, travel navigation, and search-related advertising. But last month Starboard Value, which owns 5.2% of AOL, said in a letter to the board that the properties have been “unrecognized and underutilized.” The portfolio “could produce in excess of $1 billion of licensing income if appropriately harvested and monetized,” the investor group said. AOL shares have been steadily recovering from a steep drop in August when it reported that its investments in new ventures, including local news service Patch, contributed to quarterly earnings that were far below analyst expectations. AOL’s -7.4% over the last 12 months, but it’s +22.5% since the beginning of 2012.

Comments (4)

AOL Chief: People Focus Too Much On Exec Departures And Drama

By | Tuesday March 13, 2012 @ 6:38am PDT

The controversy at AOL late last year when several executives left — including much of the management of its web site TechCrunch — still seems to stick in CEO Tim Armstrong’s craw. “There’s a huge misunderstanding about AOL from the drama perspective,” Armstrong told investors this morning at the Barclay’s Internet Connect Conference. “The media loves to write about our company.” Not just the media: Activist investor Jeffrey Smith, whose Starboard Value owns about 5% of AOL, wrote a public letter in December saying that the departures indicated “a high level of frustration inside the Company over its current strategic direction.” Yet Armstrong, whose company owns The Huffington Post, says the story was sensationalized. ”People like to make the situation out like the sky is falling.” Even though “there’s a lot of noise about people coming and going” he says that “I have been removing people from the company who were not performing. And that’s OK…The people we’ve removed, their departments are performing better….The world may look at AOL as a lot of drama, but we’re getting results.”  Indeed, he says, if reports are accurate that CNN believes social media site Mashable is worth $200M, then “our content business would be one of the most valuable businesses on the Internet.” Read More »

Comments (1)

AOL Investor Says Content Acquisitions Have Been A Big Waste

By | Wednesday December 21, 2011 @ 9:30am PST

UPDATED: The charge comes from Starboard Value CEO Jeffrey Smith, whose investment company controls 4.5% of AOL, in a scathing nine-page letter today to CEO Tim Armstrong.  AOL has lost about 36.5% of its market value this year and the “dismal absolute and relative stock price performance clearly demonstrates shareholders’ strong frustration with the current performance and future direction of the Company,” Smith writes. He’s particularly angry with the efforts to buy and build content sites that can attract display ads. Smith says that AOL spent $1.7B on assets such as the Huffington Post, Moviefone, Engadget, TechCrunch, and local news operation Patch. But shareholders put no value on them and instead are “penalizing AOL for its continued investments and losses.” For example, he figures Patch could lose $150M in 2011. “The current situation is unsustainable,” he says also citing executive departures that suggest there’s “a high level of frustration inside the Company over its current strategic direction.” The bottom line: Smith wants to meet with management to discuss a change in direction.

AOL says, in response, that over the last two years it “has significantly reduced costs, sold non-core assets, made significant investments for our future, and also recently repurchased over 10% of outstanding shares. AOL has a clear strategy and operational plan to provide our consumers and customers with exceptional value, which we believe will lead to the creation of shareholder value.” The company’s board and management are “firmly committed … Read More »

Comments (13)

AOL Chief Tells Analysts That Flat Traffic Growth Is “Up For Us”: UBS Confab

You see, AOL’s numbers had been ”artificially pumped up” by “bad distribution deals,” AOL CEO Tim Armstrong told analysts at the UBS Annual Global Media and Communications Conference. Now that the company is unwinding those deals, ”flat is actually up for us.” Armstrong says that he has three main priorities: increase AOL’s unique visitors, boost display advertising, and find ways to generate cash from the company’s growing Patch local news service. Armstrong plans to invest in Patch and the Huffington Post, which he says both will benefit from political advertising in 2012. “Everyone reads the Huffington Post in D.C.,” he says. Investors are skeptical about AOL’s prospects especially following the departure of several top executives; its shares are down nearly 39% in 2011. Armstrong says that “you may not like the strategy” AOL has. ”But we have a strategy.”

Comments (4)

Ad Gains Help AOL Narrow Loss In 3Q

By | Wednesday November 2, 2011 @ 6:00am PDT

AOL this morning reported third-quarter revenue of $531.7 million, down 6% from a year ago but marking the lowest level of decline in five years. A loss of $2.6 million, or 2 cents a share, also beat Wall Street projections as the company saw year-over-year gains in global advertising revenue, which included a 28% boost in third-party ads and a 15% rise in display — it’s the second consecutive quarter of gains in global ad revenue. ”We continue to build strong consumer experiences as we execute our strategy to build the premium branded media company for the Internet,” CEO Tim Armstrong said in announcing the earnings this morning. “Our share repurchases underlie our belief in the value of AOL and our strategy.” Still, search and contextual ads fell 15% year-over-year and overall ad revenue at AOL properties only increased 1% to $221.8 million despite the additions of The Huffington Post and TechCrunch. Expect Armstrong to be asked during AOL’s call with analysts about those figures as well as rumors of a tie-up with Yahoo, a move he says would save the company $1 billion-$1.5 billion and shore up its ad message to agencies.

Comments (0)

Is AOL Boss Pitching Merger With Yahoo, Or Is He Pitching Himself?

By | Wednesday October 12, 2011 @ 8:07pm PDT

AOL CEO Tim Armstrong is doing some behind-the-scenes pitching to major shareholders about a plan to have Yahoo acquire AOL, Reuters reported today. That he’s seeking a merger deal isn’t new, but the details are interesting: citing sources, he says such a move would save AOL $1 billion-$1.5 billion when redundancies are eliminated post-merger, and that one large entity would provide a more efficient buy for ad agencies. Those ads have been a problem for AOL, which reported weak sales during its last quarterly earnings, and its stock has suffered as a result — it’s down about 40% since it was mercifully spun off from its ill-fated merger with Time Warner. The latest report suggests Armstrong might use such a merger as a way to bow out gracefully from a company he took over in 2009 after departing from Google. Another consideration, however, is that he might want to have a crack at running Yahoo, which is seeking a new chief after ousting CEO Carol Bartz last month. In effect, Armstrong would trade AOL for Yahoo-AOL. “As far as Armstrong’s desire for an exit, he doesn’t want to be doing what he is doing 18 months from now. He wants to be out,” a source familiar with Armstrong’s thinking told Reuters. “He’s an ambitious sort of guy and AOL is such an afterthought. But he would definitely put his hat in the ring to … Read More »

Comments (5)

Bloomberg: AOL-Yahoo Merger Discussed

By | Friday September 9, 2011 @ 12:39pm PDT

AOL YahooAOL chief executive Tim Armstrong and advisers for Yahoo are discussing combining the two companies in the wake of Carol Bartz’s ouster as Yahoo CEO, Bloomberg reports. Armstrong perhaps sees his opening now that Bartz has been forced out — he was interested in a merger last year but was rebuffed. Armstrong has consulted private-equity firms and investment bankers from Allen & Co, working with Yahoo. Yahoo has been considering all its options, including acquisitions — it is believed to be a bidder for Hulu — and splitting itself into parts. One option appears to be Yahoo acquiring AOL, with Armstrong taking the reins as CEO of the combined company, according to one source. Meanwhile, Bartz has said she plans to remain on the Yahoo board, and though she thinks new interim CEO Tim Morse is “a great guy,” she feels she is the only true replacement for herself.

Comments (8)

AOL Strikes Out With 2Q Earnings As Personnel And Acquisition Costs Rise

By | Tuesday August 9, 2011 @ 4:36am PDT

AOL shares are down about 11% in early trading and here’s why: Wall Street expected AOL to deliver a 4 cent-a-share profit for 2Q, and the company reported an 11 cent loss. The net loss, at $11.8M, looks better than the $1.1B loss in the same quarter last year. But the 2010 figure included a $1.4B goodwill impairment charge. This morning’s report shows that AOL generated $542.2M in revenues, down 8% from last year — but ahead of the $530.4M that analysts forecast. AOL says its big investments in hyperlocal news service Patch are largely responsible for the continuing losses. The operation serves 846 towns, 44 more than it had at the end of March; in March, AOL closed its $315M deal to acquire The Huffington Post. Revenues at AOL’s mostly dial-up Internet subscription business fell 23% to $201.3M. But the company cheered the 5% growth in ad revenue, to $319M. “AOL’s return to global advertising growth for the first time since 2008 reflects the hard work of our team and another meaningful step forward in the comeback of the AOL brand,” CEO Tim Armstrong said.

Comments (0)
More Deadline | Hollywood »