What Will AOL's Tim Armstrong Bring to Verizon?
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AOL may have a new owner, but its chief executive is staying put.
Following the announcement today that Verizon would be purchasing the digital content company for $4.4 billion, AOL CEO Tim Armstrong wrote in an internal memo that he is staying on board post-deal. “The leadership at AOL is staying and I am staying – enthusiastically, and we made that part of the deal. We have the opportunity to build a unique and globally scaled media technology company with the scale and resources we need to make that happen."
While the deal will give Verizon access to AOL's advertising technology, content deals and 100 million mobile customers, Armstrong's value to the U.S. carrier is also something to be considered.
Since becoming CEO in March of 2009, Armstrong has seen AOL through both growth and upheaval. For one, the company was spun off from Time Warner, becoming a separate independent company after a failed 2001 merger. Patch, the hyperlocal news platform that Armstrong co-founded, was brought into the fold, but over the years saw a succession of layoffs and was ultimately spun off and sold to Hale Global. There was also raft of big ticket content-oriented acquisitions, buying the Huffington Post for $315 million and video advertising platform Adapt.tv for $405 million. Since 2009, AOL's stock price has nearly doubled.
Armstrong was notably on the receiving end of some scrutiny following his public firing of former Patch Creative Director Abel Lenz during a call with the Patch team in 2013 for taking photos in the meeting, which was regarding future layoffs. And several months later, he was criticized for his response to a question about the changes in its 401(k) policy, in which he referred to "two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were OK in general," citing those instances as part of the rationale for the restructuring.
Armstrong has been a polarizing figure since his tenure at AOL began, but what will he bring to Verizon? Management consultant and author Steve Tobak isn't entirely convinced the transition will be as smooth as advertised.
"If anything, Armstrong will bring some tech savvy to Verizon, but in terms of leadership and management style, I doubt there will be any impact whatsoever,” he says. “Verizon is led by a very mature and capable leadership team.”
Tobak also says he expects Armstrong will move on once the two companies are integrated. “Frankly, there will likely be some sort of retention deal to facilitate continuity and integration but I doubt Armstrong will remain very long beyond that. I also expect AOL will operate fairly independently. I don’t think the cultures of the two companies would meld very well otherwise."
Andre Lavoie, the CEO of ClearCompany, platform that works with human resources and business strategy thinks that Armstrong's divisive reputation could be somewhat rehabilitated by what he does next under Verizon's auspices.
"Tim deserves credit for effective business transformation. AOL's business model was equivalent to Blockbuster's, and he has been successful at pivoting it into something that has the potential to really expand. He does not have the reputation of being a particularly likeable leader, but that may be the fallout of difficult business decisions in what is likely still a challenging business transformation," he says.
Lavoie went on to say that when these kinds of mergers come about, being transparent is key to continued success. "Tell the people who will be out in the new model that they will lose their jobs and pay them to stay through the transformation. Believe it or not, most will stay. In the end, he may just improve his likeability in the face of great change. Either way, this will be an interesting acquisition to watch!"