AOL replaces CEO Randy Falco with Google executive

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Randy Falco, pictured here in 2004, was replaced today as CEO of Time Warner’s AOL unit. Credit: Dean Cox / Associated Press.

A high-ranking but relatively unknown Google executive will take the helm of AOL from television-industry veteran Randy Falco, Time Warner said today. Tim Armstrong, formerly head of Google’s North American and Latin American advertising sales and operations, will take over as chief executive of Time Warner’s struggling Internet unit.

“Tim is the right executive to move AOL into the next phase of its evolution,” Time Warner CEO Jeff Bewkes said in a statement. “He’s an advertising pioneer with a stellar reputation and proven track record.”

Falco and Chief Operating Officer Ron Grant will leave the company after a transition period, the company said.

The tenure was short for former NBC Television President Falco, who was a surprise pick to lead AOL in late 2006. Falco had worked at NBC for 31 years and left the company shortly after he was passed over as a candidate to lead it.

At the time, Bewkes said that Falco had the ‘right tools’ for AOL, pointing to his experience in operations, video programming and advertising.

Others were skeptical. Laura Martin, an analyst at Soleil-Media Metrics, said then: ‘AOL and the Internet have very little to do with linear television programming expertise. ... It will be interesting to see whether he can adapt.’

Even as he announced Falco’s departure, Bewkes explained today that ...

... Falco had led AOL “in its transition from a subscription business to an audience business.” During that time, Bewkes said, AOL’s programming sites exhibited year-over-year growth in unique visitors for 23 consecutive months. Falco and COO Ron Grant “leave AOL with our gratitude and appreciation for remaking the company and bringing it to a new and promising level,” Bewkes said.

But AOL’s advertising business didn’t keep pace. Time Warner said last month that AOL’s revenue fell during the fourth quarter and for the full year. AOL said Tuesday that it would cut 10% of its workforce, after cutting 20% in 2007.

Armstrong, who was still listed as a Google manager on its website as of 3:30 p.m. PST, came to Google from Snowball.com, where he was vice president of sales and strategic partnerships. He’s also worked in sales and marketing at Starwave’s and Disney’s ABC/ESPN Internet Ventures, working across the companies’ Internet, TV, radio, and print properties. He sits on the boards of the Interactive Advertising Bureau, the Advertising Council and the Advertising Research Foundation.

Though she wasn’t a fan of Falco’s hire in 2006, Martin is even less happy about his departure. She said today that she’s surprising AOL is replacing him. “Randy Falco is a huge loss to Time Warner,’ she said. ‘He was a visionary and could work within the larger corporate umbrella.”

AOL’s troubles don’t seem to be a good enough reason to shake up its management, Martin said.

“The market would prefer to see Time Warner spin off AOL, not try to fix it by hiring a guy from outside,” she said. The company’s shares dropped about 5 cents in after-hours trading following the announcement. They had gained 41 cents to $8.32.

But Pali Research analyst Rich Greenfield, who had been leading calls for AOL to replace Falco, called the move ‘a significant positive’ for Time Warner and said he ‘never anticipated an executive of Tim Armstrong’s pedigree’ would agree to lead AOL.

-- Alana Semuels