Deals and IPOs

Armstrong: Verizon wanted AOL's content too

AOL CEO: Verizon deal all about content

AOL CEO Tim Armstrong on Tuesday responded to reports that the future of his company's content brands—including the Huffington Post—are in limbo following its announced merger with Verizon, saying they were always part of the deal.

AOL's advertising unit has outpaced revenue growth among its content brands, fueling speculation that the company's ad technology platform was at the heart of Verizon's bid.

"I think the ad tech platform is a big piece of it, but as we've gone through the conversation with them, they've realized how important content is," Armstrong told CNBC's "Squawk Box." "There were a lot of stories saying whether or not Verizon was going to keep the content part of AOL, but that's always been part of this transaction and something that I think they're excited about."

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Last month, Re/Code reported that AOL had held discussions with various parties to spin off the Huffington Post while negotiating with Verizon. The talks were most serious with German media conglomerate Axel Springer, and a number of private equity firms expressed interest in AOL's flagship website, sources told Re/Code.

Armstrong called the Huffington Post a "very important asset," noting that it has grown its audience to about 200 million users from 20 million to 30 million four years ago when AOL purchased it. He said the Huffington Post will receive more investment as part of the combined company, adding that founder Ariana Huffington was involved in merger discussions.

"Ariana has a relationship with us and with the company, which i think will be ongoing for a long period of time," he said.

AOL's other content brands include Tech Crunch, Engadget, Moviefone and MapQuest.

"I think Verizon's getting a full suite. I mean, we were the lowest value, largest Internet company really in the world, and I think it's a great deal for Verizon to do both content and advertising," Armstrong said.

Arianna wants to grow HuffPo: Tim Armstrong

AOL has been successful in ad platforms partially because it has invested in content, he added, noting that 396 million people visit its websites each month, creating an opportunity to drive advertising systems.

Armstrong also addressed an SEC filing that came to light that showed AOL was approached by three other bidders after Verizon expressed interest in buying the company. He asserted that the $4.4 billion Verizon buyout was the best deal for AOL's shareholders and employees.

"We, as a board, took a step back and said 'What is going to take AOL to next level?' We had one sheet of paper that had multiple dimensions on it overall, and Verizon basically ticked all of those boxes," he said.

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Verizon was the most natural fit, in part because it services 1.5 billion connected devices in the United States, Armstrong explained. AOL made its decision on the belief that mobile will account for 80 percent Internet traffic in the next two to three years, he added.

"The reality is half of the M&A deals today are synergistic, meaning people are trying to take costs out and get a little bit of revenue growth. This deal is all about growth," he said.

Disclosure: NBC News group is a minority stakeholder in Re/code and has a content sharing partnership with it.