Verizon enters online video with AOL deal
Print Edition
VERIZON is buying AOL for about US$4.4 billion, advancing the telecom firm’s push in both mobile and advertising fields.
The acquisition gives Verizon an entryway into increasingly competitive online video. The New York company is the country’s largest wireless carrier as well as an Internet and TV provider, and it is through wireless technology that the fight is escalating to win customers using video content.
Verizon said last month that it was preparing to launch a video service over the summer targeting mobile devices and it is establishing partners to deliver that content. It also recently began offering various levels of cable service rather than one big cable package, which has been the norm.
That has put Verizon at odds with major content companies like ESPN as it sees more customers cut the cord in favor of video that is streamed online.
Verizon will gain access to AOL’s advanced advertising technology, including its “One by AOL” integrated platform. AOL reported a 7 percent boost in revenue during its first quarter, mainly on strong global advertising sales.
It also gains control over significant AOL content, including cultural and political website The Huffington Post, and also TechCrunch. AOL is the US’ fourth-largest online property with about 200 million monthly consumers of its premium brands, according to its website.
Verizon Communications Inc will pay US$50 in cash for each share of AOL Inc, also based in New York, a 15 percent premium to its closing price on Monday.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” said chairman and CEO Lowell McAdam in a printed statement.
The deal is expected to close this summer and Tim Armstrong, AOL chairman and CEO, will continue to lead that company.
Verizon has 108.6 million wireless customers, 5.7 million FiOS video subscribers and 6.7 million Internet subscribers. It operates in 150 countries.
During its most recent quarter, it saw wireless subscribers grow by 4.8 percent, while FiOS Internet customers grew 36 percent. FiOS cable customers grew 58 percent.
AOL has evolved since its early days as an Internet company with the familiar phrase “You’ve got mail.” It started out as Quantum Computer Services in 1985 and was renamed America Online in 1991. By 1996, it had 5 million members.
AOL bought Time Warner for more than US$160 billion in 2000. That deal became a disaster and AOL was spun off from Time Warner in 2009.
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