Regulatory approval of AOL’s $315 million acquisition of the Huffington Post is still pending but CEO Tim Armstrong already has a new structure for the evolving company. The changes were set off by the plan to make Arianna Huffington president and Editor-in-Chief of the Huffington Post Media Group. Several top executives will add responsibilities as properties are shifted: Jon Brod will be the Media Group COO — and David Eun is leaving. Eun and Armstrong discussed his decision to leave and outlined the newest version of AOL (NYSE: AOL) for paidContent.
“We’ve really spent a lot of time basically getting AOL organized from being the worst merger in corporate history to where it is today,”said Armstrong. Bringing in the Huffington Post provided another impetus to look at the way AOL was structured at the top while sticking to its content-centric strategy.
The changes slated to take place once the deal closes include:
– Moving Studio Now, 5Min, GoViral, Adtech, Advertising,com, Pictela and Seed into a new network services group headed by Ned Brody, currently the COO of Advertising, Media and Commerce, and president of Paid Services. With the exception of homegrown Seed, the others were acquisitions that came with outside clients. The new group, which doesn’t yet have a name, will hold AOL’s scale businesses; they’ll continue to provide internal services, says Armstrong, but will also manage content production, distribution and network advertising for other publishers. He describes it as a “high quality content and ad business on the network side.” Brody also adds international and analytics.
– Shifting to an editor-publisher structure for media. As COO of the *HP* Media Group, Jon Brod, currently president of Ventures, Local & Mapping, will report to both Huffington and Armstrong. Huffington will have full responsibility for editorial, while Brod essentially will be the publisher, responsible for revenue and distribution. He also remains president of AOL Ventures.
– Moving Patch into the new media group, where it will continue to expand with more editorial and sales hires. Huffington has been effusive about the local news startup, which will continue to be headed by Warren Webster on the business side.
– Brody’s Paid Services responsibilities will move to CFO Artie Minson, along with corporate marketing — which will include a focus on membership services a new rewards program. Minson is also chief administrative officer. CMO Maureen Sullivan has been reporting to Armstrong. When I suggested this was sure to bring a question about whether AOL is also telling longtime subscribers they don’t have to keep paying to keep AOL email, Eun pointed out that AOL picked up more than 700,000 new paid services subscribers last year. That includes access subscribers, dwindling in number but still vital in revenue plus non-access subscription products like PC utilities/security.
– Adding commerce to Brad Garlinghouse’s consumer applications portfolio of user experience. AIM, AOL Mail, mobile and tablets.
Eun’s departure: Once people got past the shock of AOL acquiring the Huffington Post, the question I heard the most often was what happens to Eun? The Google (NSDQ: GOOG) vet followed Armstrong to AOL a year ago to head media — Huffington’s new job in the merged company includes that — and it was hard to see where he would fit in. Turns out he doesn’t — at least, not the way that mattered most to him. Eun said he would rather take a shot at finding another large media company to run than stay in one of the roles Armstrong and Huffington suggested as a solution. “Dave and I worked closely for the past 6-to-7 years. He wants to move on, to try to run another large media organization and I will be supportive.”
Eun is no stranger to Huffington; the two have known each other for years. He recalls her trying to hire him when he was at Google and said he encouraged what first looked like a possible expansion of a current content-traffic deal with HuffPo and then became a full-out acquisition. He realized the odds that there would be a place that he wanted would be slim but thought the deal was good for AOL.
“With Arianna here and Patch and premium content, the role I want to play is evolving” Eun said. His multi-year contract included an out clause if his job changed and he decided to exercise it. “It’s not easy but I go back to why did I come. The job I came here for isn’t exactly the job that’s going to be available after.” Announcing the decision, which came after transition discussions with Huffington, Armstrong and Brod, removes the speculation and frees him up to discuss other possibilities that better fit what he wants while he helps finish the integration planning. He said he would remain an AOL shareholder.
Armstrong and Eun denied that his job was on rocky grounds in recent months despite various reports. Armstrong attributes some of the negative talk to Eun’s “changing the culture of how media gets done at AOL.” Eun’s work shifting from 300-plus brands to focus on premium content at scale and the video acquisitions helped make it possible for to make the Huffington Post deal, Armstrong said.
Asked to list what he sees as his top accomplishments at AOL, Eun pointed to the relaunches of AOL Video and the front page, and the resulting shift in traffic. In the nine months before he joined last March, inbound traffic to AOL was down 26 percent; that’s reversed and has grown by 23 percent. In video, AOL jumped to six places to #5 on comScore’s video chart while video usage on AOL.com’s front page rose considerably. He said search revenues are up for AOL.com, as are referrals.
Regrets? One would be that they didn’t do a better job explaining what has now become known as the “AOL Way” following the leak of a presentation showing how to maximize content traffic. “My first month, we agreed on a strategy — high-quality content at scale. We said there’s a way you can do both and create a road map.” The presentation from the ops team was meant to show the best practices and guidelines in a “working” document. “It’s not some kind of ‘we’re checking up on you.’” For Eun, it was more of a primer meant for the people in AOL’s content stream who didn’t already know how to use tools like SEO, tags or the data AOL collects instead of relying on the front-page fire hose. Sites like Engadget and TechCrunch weren’t in that category. “We shouldn’t have called it some grandiose thing that sounds like big brother,” Eun said. He was concerned that the title distracted people from the purpose. [I should add, the main concern about the title seemed to be how it was perceived outside AOL when it spread after the leak.]
Left to be done: the mid-and lower-level changes that may be more seismic in the long run. Huffington has promised that her staff will all have jobs; Armstrong has admitted they’ll have to look at some overlaps on the AOL side.
Update: A thought at the end of a long day, following a lot of conversation about the changes at AOL. My sense is that some of this was the law of unintended consequences at work: Tim Armstrong saw a way to make a major deal that bolsters AOL but may have misjudged the internal ripple effects on his side. David Eun came to AOL with a particular role in mind, to move out from the ranks at Google and lead a media operation. Once that role was gone, nothing, including running the business side of the media group, matched up. His decision set some changes in motion; some of the other shifts came from the way parts of AOL are being brought into the new media group.
As I mentioned above, more staff changes are on the way as the ripples continue. For all of the energy some may feel about the merger, others are concerned about whether they will have jobs or how they will mesh with the HuffPo team.