May 9, 2021

Knews

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Verizon sells Internet Icons AOL, Yahoo

Expensive ownership of Internet icons AOL and Yahoo has ended, after Verizon announced the sale to private equity group

The future of the two iconic Internet-era veterans is in the spotlight, after owner Verizon announced their sale to a private equity group.

The form of AOL and Yahoo is Verizon Media, and it will be sold to private equity firm Apollo Global at a cost of just $ 5 billion, ending an expensive operation in the media and advertising world for Verizon Communication.

This is not a good financial return for Verizon, which acquired AOL or $ 4.4 billion in 2015. Verizon then Yahoo acquired its internet business in 2016 for $ 4.83bn, meaning Verizon spent a total of $ 9.2 billion on the two assets.

Bad return?

Verizon expects to head to Google’s ad giants Google and Facebook, thanks to its ownership of AOL and Yahoo, and hopes to position Verizon Media as a leading mobile media company.

But five years later Verizon Communication confirmed it was selling Verizon Media for just $ 5 billion.

It said Verizon will retain a 10 percent stake in the company, which will be identified as Yahoo at the conclusion of the transaction and will continue to be led by CEO Guru Gowrappan.

The firm said the sale will “allow Verizon Media to aggressively pursue growth areas and stand up to benefit its employees, advertisers, publishing partners and nearly 900 million monthly active users worldwide.”

Growth potential

“We are excited to join Apollo,” Gowrappan said. “The past two-quarters of double-digit growth have demonstrated our ability to transform our media ecosystem.”

“With Apollo’s sector expertise and strategic vision, Yahoo is well positioned to take advantage of market opportunities, media and transaction experience and continue to grow our entire digital advertising platform stack,” Gowrappan said. “This move will help to accelerate our growth for the company’s long -term success.”

“We are excited to help unlock Yahoo’s enormous potential and its unparalleled collection of brands,” said Reed Rayman, Private Equity Partner at Apollo. “We have tremendous respect and admiration for the great work and progress the entire organization has made over the past few years, and we look forward to working with Guru, his talented team, and our Verizon partners to accelerate Yahoo’s growth in its next chapter. “

“Verizon Media has done an incredible job in business rotation over the past two and a half years and the growth potential is enormous,” added Hans Vestberg, CEO, Verizon. “The next iteration will require full investment and the right resources. During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media. I am fully confident that Yahoo is leaving its new home. “

The transaction is subject to certain closing conditions and is expected to close in the second half of 2021.

Long to come?

AOL has become a pioneered in the early days of the Internet, signing up more than 20 million dial-up customers at one stage, and merging with Time Warner in 2000 in a $ 183 billion deal.

But after the dot-com bust, AOL was left without Time Warner in 2009, and then helped CEO Tim Armstrong to take the company in a new direction.

Under Armstrong’s leadership, AOL rapidly expanded into advertising technology, as well as creating a plethora of technology news sites such as Engadget and TechCrunch.

AOL is also behind The Huffington Post.

AOL’s dominance of dial-up customers is all gone now, but it still owns a relatively profitable base of 1.5 million customers who pay for technical support and identity theft services each month. .

In 2009 AOL is shutting down the formerly leading online community at CompuServe.

Yahoo is also another icon from the early days of the Internet, and it still has nearly 150 million daily active users and nearly 900 million monthly active users.

But the two entities, under the ownership of Verizon Media, have not really challenged the dominance of Facebook and Google.

Verizon Communication then chose to continue to leave the media sector in recent years, to focus more on expanding its 5G network in the US.

In 2019 Verizon sold the Tumblr blogging platform in 2019 for an undisclosed amount (thought to be $ 3m) after acquiring it as part of Yahoo’s acquisition.

Verizon also sold news website HuffPost to BuzzFeed last year.