Verizon arranges to buy AOL for $4.4b

Rob Powell/Telecom Ramblings
13 May 2015
00:00

In a chess move that will further blur the lines between content and networks, Verizon yesterday announced an agreement to buy AOL.

Verizon will be paying $50 per share for about $4.4 billion in cash, a 17% premium for AOL's stockholders.

Imagine it's 2000, and Verizon was out there buying AOL. It would have been a vastly different acquisition than it is today, aimed at a dialup access empire. Today's AOL is about content and digital advertising, with familiar online brands like the Huffington Post, Engadget, and TechCrunch as well as a mobile advertising focus and some original video as well.

With no inorganic expansion available in the US mobile world, Verizon is clearly looking to add on more of the surrounding ecosystem of data it already delivers over its mobile networks.

To get into content, the inorganic path is far easier for Verizon. After all, they tried starting their own tech news and commentary site last year with SugarString. But that bombed quickly after reports that from day one the site's writers had their hands tied on subjects like net neutrality or NSA wiretapping.

With the AOL deal, they acquire some of the biggest names in tech journalism intact, and presumably they learned that lesson and won't be interfering again in that way.

But while the content may be the most visible part of this deal, the critical piece for Verizon is probably the mobile advertising and video piece. How they integrate that into their empire will say a lot about the next stage of development of our wireless networks.

This article was authored by Rob Powell and was originally posted on Telecomramblings.com

Rob Powell is founder & editor of Telecom Ramblings, which was set up in 2008. The website is dedicated to discussing trends and developments in the telecom industry.

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