Verizon is buying AOL for about $4.4 billion, advancing the telecom’s push in both mobile and advertising fields.
The acquisition gives Verizon an entryway into the increasingly competitive online video space. The New York company is the country’s largest wireless carrier as well as an Internet and TV provider, and it is increasingly over the wireless space that telecom companies are fighting to win customers through video content.
Last month, Verizon said 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 tiered cable bundles, putting it at odds with major content companies like ESPN, as it sees more customers cut the cord in favor of streaming video.
Verizon Communications will pay $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.
“This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.
“AOL has once again become a digital trailblazer, and we are excited at the prospect of charting a new course together in the digitally connected world. At Verizon, we’ve been strategically investing in emerging technology, including Verizon Digital Media Services and OTT, that taps into the market shift to digital content and advertising. AOL’s advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams.”
The deal is expected to close this summer and Tim Armstrong, AOL chairman and CEO, will continue to lead that company.
“Verizon is a leader in mobile and OTT connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers,” Armstrong said of the deal. “The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video.”
