Last week we reported that TMZ had stopped its ad sales arrangement with its JV owner AOL, and raised some questions about AOL’s stake in the celeb site following the portal’s spin-off from Time Warner (NYSE: TWX). Staci asked AOL CEO Tim Armstrong about it in her long interview with him, but thought best to break out his response:

“Are you disappointed that AOL is no longer selling advertising for one of its own properties, TMZ, and is that something that might happen more?

Armstrong: No. As a matter of fact I think we have to look at TMZ from an ownership perspective so if you ask me is TMZ selling their own ads a good thing or not a good thing in relation to AOL, I would say, ‘If the value of TMZ increases, it’s a really good thing for us.’ I would also say that TMZ has a television property and an online property and, as you know, the properties that have television plus websites tend to sell more integrated packages. AOL currently does not have a real strong foothold in TV so if TMZ’s able to sell that, that’s beneficial to us. I know the TMZ people well, I’ve talked to them multiple times and I think that’s a partnership we’re happy with. The second piece, we have a substantial property in Popeater that’s maybe twice the size of TMZ from a traffic perspective so we are very focused on monetizing Popeater and the entertainment properties. If you take a step back and look at the marketplace of how TMZ maximizes revenue and Popeater maximizes revenue with TMZ having television. I think it makes sense that TMZ may be better off selling on its own.

Is there anything that could change with the TMZ ownership as a result of AOL spinning off?
Armstrong:That’s a joint venture so I don’t know yet how the ownership of TNZ will change if we spin off but that would strike me as an area we’d have active discussions with TMZ and Time Warner on.”

We will update as we know more on the status of those talks…

• TMZ Brings Ad Sales In-House With Telepictures; Future After AOL Spinoff Under Spotlight