Charlie Rose Talks to Tim Armstrong & Arianna Huffington

Tell me how this happened.

Huffington: It started, actually, in November at the Quadrangle Conference. Tim was speaking. I heard him talk very honestly about the strengths and weaknesses of AOL (AOL). And he and I chatted after that. We met the next day at his office. And it was kind of amazing.

Armstrong: It was a meeting of the minds. We were finishing each other's sentences. Over the course of the next month or two we met several times. In between Christmas and New Year's, I e-mailed Arianna and said, "Do you mind if we come out and visit you in California?" We went out and had lunch at Arianna's house—Artie Minson, who is our CFO, and I. Over the course of that lunch, that's really where we got serious about putting a deal together.

What makes this a win-win?

Armstrong: We just did a research study last year. People typically use 20 content brands a month on the Internet. They use 14 on cable television. If you connect the dots … all of that has got to be fueled by content. And if you look at a property like the Huffington Post or other properties of ours, it's not hard to marry those two visions together and think that the most important thing in the next phase of the Internet is going to be content.

Arianna, what's your role now?

Huffington: I become the president and editor-in-chief of the Huffington Post Media Group, which includes the Huffington Post and the AOL content sites, such as PopEater—the entertainment site—Engadget, TechCrunch. It's an opportunity to bring together what was done well at the Huffington Post, the engagement, a certain way that our news consumers don't just consume news. They share it. They tell their own stories. To bring that across all the AOL sites.

How did you make the decision to get the capital to grow through this deal, rather than by going public?

Huffington: We didn't need capital. We had become profitable. We could continue growing the way we had been growing—22 percent last year—without any additional capital. And we were not looking to sell. Our board wanted to do an IPO down the road. This deal happened because Tim and I had the same vision, literally, almost identical in terms of expanding local [coverage], launching internationally, building community, doing a lot more in the women's space, and a lot more around causes and cause marketing.

Some have called this a Hail Mary pass for AOL.

Armstrong: That question came up because when I came into AOL it was inside of Time Warner (TWX) and they had done the [$850 million] Bebo acquisition, which a lot of people concluded to be a Hail Mary. First of all, since I've got the company, I invested my own money into the company. There are no Hail Marys. We have a very specific laser-focused strategy. We have a very strong vision for where the Internet is going. That's why I think Arianna's at this table right now, because you don't get people like Arianna Huffington unless you have a strong vision.

Who's your competition now?

Huffington: We're competing against ourselves because what we are doing is providing great content across all platforms. AOL has an incredible investment in video—and we intend to double down on that—a great investment in local [coverage] just in time for the Presidential election, over 800 towns already being covered by professional journalists.

So the challenge is to do it on a bigger scale?

Armstrong: One of the unique things we're bringing to the table is, we are going to be the first digital content company that is going to connect on a global, national, and local basis. We will be the largest single affiliate network on the Internet space in the U.S. And that's powerful.

I've written one blog in my life, and it came about because I was having dinner with Arianna.

Huffington: The first person I invited to blog was Arthur Schlesinger. He said to me, "How do you use a computer?" I said, "Don't worry. Fax it to me." Rahm Emanuel, Larry David, they call and dictate their blogs to us from the stairs, the golf course. The important thing is: Here's a platform that's available whenever they have something to say. That is now only going to be amplified.

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