Verizon sells internet trailblazers Yahoo and AOL for $5B
AOL and Yahoo are being sold again, this point to a personal equity firm.
Wireless company Verizon will sell Verizon Media, which consists of the once-pioneering tech platforms, to Apollo Global Management during a $5 billion deal.
Verizon said Monday that it’d keep the tenth stake within the new company, which can be called Yahoo.
At the top of the last century, Yahoo was the face of the web, preceding the behemoth tech platforms to follow, like Google and Facebook. And AOL was the portal, bringing almost everyone who logged on during the internet’s earliest days.
Verizon spent about $9 billion buying AOL and Yahoo over two years starting in 2015, hoping to jump-start a digital media business that might compete with Google and Facebook.
It didn’t work — those brands were already fading even then — like Google and Facebook, and, increasingly, Amazon dominate the U.S. digital ad market. The year after buying Yahoo, Verizon wrote down the worth of the operation, called “Oath,” by roughly the value of the $4.5 billion it had spent on Yahoo.
Verizon has been shedding media assets because it refocuses on wireless, spending billions on licensing the airwaves needed for the next faster mobile service, called 5G. It sold blogging site Tumblr in 2019 and HuffPost to BuzzFeed late last year. The digital media sector in recent years has been consolidating as companies seek profitability.
Verizon’s properties include Yahoo Finance, Yahoo Mail, and therefore the tech blogs Engadget and TechCrunch.
Despite its difficulty competing with tech giants for ad dollars, resulting in cost cuts and layoffs, Verizon Media’s revenue rose 10% within the most up-to-date quarter from the year before to $1.9 billion. The division still has nearly 900 million monthly users, and it generated $7 billion in revenue in 2020, consistent with Verizon and Apollo.
Apollo says they’re “big believers within the growth prospects of Yahoo” and expects that overall growth in digital advertising will boost Yahoo too, said Apollo senior partner David Sambur during a prepared statement. Apollo has invested in other media and tech companies, just like the photo website Shutterfly and television and radio stations formerly owned by Cox.
Apollo is betting that the Yahoo division’s info collects from its users, who log in to products like email, appeals to advertisers as ad-tracking technology changes, said Forrester analyst Joanna O’Connell.
Financial firms have played an increasingly prominent role in traditional media in recent years because the newspaper industry struggles with the decline of print advertising, buying up chains, and slashing costs and jobs.
Verizon will receive $4.25 billion in cash, preferred interests of $750 million, and therefore the minority stake.
The deal is predicted to shut within the last half of the year.
Shares of Verizon Communications Inc., based in N.Y., rose but 1% Monday.