"Tim and I have a great relationship. The first year, when we worked out a lot of things, it had its hard moments," Huffington said. "If you look at The Huffington Post's growth and innovation it's staggering. It would not have happened without Tim."
Instead of replacing Huffington, Armstrong restructured the business as part of a wider reorganization of AOL. Huffington's title did not changeshe was still president and editor-in-chief of The Huffington Post—but she lost oversight of the other AOL editorial brands in April 2012.
(Read more: Ad surge a big 'megatrend' helping AOL: CEO Armstrong)
Later that year, The Huffington Post was given its own chief executive, Jimmy Maymann, who was previously in charge of AOL's international properties. He reported to Huffington but had operational oversight, including building out a sales team.
Maymann told Reuters that the changes meant The Huffington Post could operate like a start-up within a larger organization. It was still part of the Brand Group, but it had its own budget, technical resources and dedicated sales staff that will grow to about 40 people from a handful previously.
"The Huffington Post has now got the keys to the car," said Maymann, who had joined AOL after it bought his video distribution company, Goviral, in January 2011.
"AOL is still in the car, they are just in the back seat, whereas for a little bit of time there was some confusion (over) who was driving. That has made the relationship a much better one and a much healthier one," he said in an interview.
The restructuring came as The Huffington Post faced growing competition from other new-media start-ups, such as Buzzfeed.
Buzzfeed has become one of the fast-growing U.S. media sites—it now employs 300 people and is profitable, according to its founder and CEO Jonah Peretti, who also helped start The Huffington Post.
In explaining the restructuring, Armstrong said, "There were a lot of areas AOL wasn't moving fast enough in and was slowing The Huffington Post down."
Live, from Davos
AOL executives are betting on international sales to increase profits at The Huffington Post next year. AOL bankrolled the site's expansion in France, Japan and northwest Africa, and it plans to be in Brazil, India and other countries that collectively generate almost 50 percent of the world's gross domestic product by the end of 2014.
Maymann said the site decided to partner with foreign media properties, which take about a 25 percent cut in advertising sales, to defray costs and to increase traffic. By the end of next year, executives expect half of The Huffington Post's traffic to come from outside the United States.
AOL has also invested millions of dollars to install professional TV studios to broadcast HuffPost Live, an effort described as the first cable channel on the Web. It combines real-time shows with audience feedback through online comments. Programming runs the spectrum from an interview with U.S. Secretary of Health and Human Services Kathleen Sebelius to "Sexercise 101."
Armstrong said the live programming can garner tens of thousands to hundreds of thousands of viewers, while millions of people tend to view the programs on demand. Still, a deal to carry HuffPost Live content on cable through a partnership with Mark Cuban's AXS TV is stalled.
The Huffington Post also closed its Los Angeles studio to redirect resources internationally to cover events such as the World Economic Forum's annual meeting in Davos, Switzerland.
"We are continuing investments in video and international," Armstrong said. The Huffington Post "has very strong prospects to have a global profitable business as we go through 2014."