CNBC News Releases


Steffanie Marchese

When: Today, Monday, October 3, 2011

Where: CNBC’s “Squawk on the Street

Following is the unofficial transcript of an EXCLUSIVE CNBC interview with Tim Armstrong, AOL Chairman & CEO, today on CNBC’s “Squawk on the Street” (M-F, 9-11AM ET). All references must be sourced to CNBC.


SIMON HOBBS: It's been a rough road for AOL. The stock is down almost 50 percent this year alone. But now the company is making a big move that it hopes will help the stocks reverse course. Julia Boorstin is here with another CNBC exclusive. Welcome back Julia.

JULIA BOORSTIN: Thanks so much, Simon. We are joined now by AOL CEO Tim Armstrong. Tim, thanks for talking to us today. I understand you're announcing a new strategy for AOL. What is it?

TIM ARMSTRONG: Sure, Julia, great to see you again. This week is advertising week, one of the most exciting weeks. It's kind of our Super Bowl in the internet business. And we're announcing a number of different initiatives. One is a continuation down the premium content path with the expansion of Huffington Post and a number of new video properties.

And then in the advertising business, which we also consider to be a very big growth opportunity for AOL, is the expansion of Project Devil, which we-- you and I spoke about last year this-- during this week-- which is-- really the innovation of display advertising and brand advertising online. We're now taking that to video with a partnership with Publicis Groupe and VivaKi, which is a $65 billion spender-- a year on global advertising.

JULIA BOORSTIN: So this is a big push for video both in the content and the-- and the ads. But is this enough to save AOL or is this too little too late?

TIM ARMSTRONG: So Julia, AOL is a big strong internet company. We're number five in the United States. We have just crossed 1 billion pages views in August for Huffington Post. AOL video traffic is up 86 percent. Year over year we've had very good success with Project Devil and the growth of our display platform. We announced for the first time in Q2 AOL's global advertising group for the first time in four years.

So there's a lot of noise around the sector and around AOL. But if you look at the results, AOL is on the comeback path and I would expect moves we're making today plus the things we've done over the last couple years to make AOL a very successful company--


TIM ARMSTRONG: --in the future.

JULIA BOORSTIN: Simon, I understand you wanted to--

SIMON HOBBS: Oh yes, sorry, let--


SIMON HOBBS: -well, let me dive in. Obviously there's a lot of-- welcome, Tim, nice to have you on the program.

SIMON HOBBS: There's a lot of-- interest clearly in what might happen at Yahoo. And we know that they're-- they're dealing with their strategic decisions there and whether or not the-- their Chinese partner might buy in to part of that. Do you see potentially a deal that could be one between yourselves and Yahoo or at least the rump of the business in the United States of Yahoo? I think Arianna Huffington actually raised the prospect of a merger when she spoke to-- Kayla Tausche at CNBC, September 21.

TIM ARMSTRONG: So let me just take a step back for a minute and talk about what's happening on the internet and that will put into context what you'll see us do in other companies, I think. Number one is you're seeing the urbanization of the internet where Silicon Valley is in a war for platform use. That you see the device companies, Apple, Amazon, those type of companies investing in devices.

You see the network companies investing in network. Content is going to become the central theme, it's been our thesis for two years. And I think this week is kicking off the content economy online. So AOL's been the largest single investor in content brands on the internet. You see some of our competitors making announcements this week around that.


TIM ARMSTRONG: So I think AOL as a company, we have a stand alone strategy and a go forward basis. I've said this publicly, we'd love to put our strategy on top of more traffic. But I think for this week and on a go forward basis we're really focused on--

SIMON HOBBS: So does that mean you would--

TIM ARMSTRONG: --executing our strategy.

SIMON HOBBS: --do a deal with Yahoo then if you would like to have that increased traffic? Is that what you're saying?

TIM ARMSTRONG: No, I-- I-- look, I think we've been very clear about our execution and about our strategy, that's what we're singularly focused on. We're not paying a lot of attention to the competition at this point. So-- I think our number one goal is to get through the end of this year and get into 2012 and continue to move our strategy forward as a stand alone company.

JULIA BOORSTIN: Tim, you spent $315 million for Huffington Post, a price that many considered way too high. Now the whole company's valued at about $1.3 billion. Was that acquisition worth it?

TIM ARMSTRONG: Look, I think if you think about where the Huffington Post is, we've launched 22 new sections-- the traffic, we surpassed the New York Times in terms of online traffic around news and we have some incredible partnerships we're announcing today. One with Jennifer Lopez, Mark Burnett-- a partnership with him with CliffsNotes, we announced. We have Steve Stoute, The Tanning Effect In America.

I think what you've seen from us in the acquisition of Huffington Post is really an incredible brand with incredible growth prospects. And if you look at what's going to happen this week, the number of ad announcements and content announcements, you have to say we're in the pole position to be the largest single content company in the digital space. So I think--


TIM ARMSTRONG: --it was a great value for us, a great value for our investors. And as Warren Buffett says you have to be greedy when other people are fearful. People that are very fearful about the content space, we've been greedy. I think that's going to pay off in the long term.

SIMON HOBBS: Tim, there's a lot of focus--


SIMON HOBBS: --about Michael Arrington leaving the business, the-- the founder of the-- the TechCrunch blog. From a leadership standpoint what have you learned from that? Is that-- is that a talent issue or is that-- the-- the-- the-- a journalism issue on-- on the mixing of-- of ethics there? I mean, how do you come out of that?

TIM ARMSTRONG: First of all, let me just say this. Michael Arrington is one of the best entrepreneurs I know. We're still partnering him in The CrunchFund and we're looking forward to that. We've been very successful with AOL Ventures. Second thing is TechCrunch has grown tremendously since we acquired it both in traffic and in profitability.

So I think we're ending up in a world where we're going to continue to focus on TechCrunch and invest in it and we're going to continue down our path of being partners with-- Michael Arrington. So look, I think the journalism world has lots of questions because what I said, I think people have looked at content not in a questionable way of how it's going to be in the future. And we've been investing in it. So I would expect us to you know, this summer, over the course of the summer and over the course of the next 12 months to continue invest in Michael and in TechCrunch.

JULIA BOORSTIN: Unfortunately we have to leave it there. Tim Armstrong, thanks so much for talking to us and we look forward to hearing more about your announcements--


JULIA BOORSTIN: --at advertising week.

TIM ARMSTRONG: Thanks Julia.

JULIA BOORSTIN: Thanks, bye. Simon?

SIMON HOBBS: Thanks Julia.

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