Verizon Agrees to Buy AOL for $4.4 Billion

Armstrong

Wireless giant gets ad technology for mobile video; AOL Chief Tim Armstrong to remain

Mike Shields And Thomas Gryta report: Verizon Communications Inc. agreed to buy AOL Inc. in a $4.4 billion deal aimed at advancing the telecom giant’s growth ambitions in mobile video and advertising.

“Certainly the subscription business and the content businesses are very noteworthy. For us, the principal interest was around the ad tech platform.”

— Verizon’s president of operations, John Stratton,

The all-cash deal values AOL at $50 a share, a 23% premium over the company’s three-month volume-weighted average price. AOL shares rose 18% in morning trading to $50.18. Verizon shares fell 1.7% to $48.98.

The acquisition would give Verizon, which has set its sights on entering the crowded online video marketplace, access to advanced technology AOL has developed for selling ads and delivering high-quality Web video.

“Certainly the subscription business and the content businesses are very noteworthy. For us, the principal interest was around the ad tech platform,” said Verizon’s president of operations, John Stratton, at a Jefferies investor conference early Tuesday.

Time Warner CEO Gerald Levin, left, and America Online CEO Steve Case give a high-five after announcing that AOL was acquiring Time Warner in 2000. Photo: Chris Hondros/Newsmakers/Getty Images

Time Warner CEO Gerald Levin, left, and America Online CEO Steve Case give a high-five after announcing that AOL was acquiring Time Warner in 2000. Photo: Chris Hondros/Newsmakers/Getty Images

The U.S. wireless business has matured in recent years, leaving carriers like Verizon, AT&T Inc. and Sprint Corp. increasingly fighting to steal market share from one another. Offering digital video-over-wireless connections represents a growth avenue in coming years for Verizon, which last year brought in $127 billion in revenue and profit of $12 billion.

Verizon has said it plans to launch a video service focused on mobile devices this summer. The company has offered few details, but last month Chief Financial Officer Fran Shammo said the service would offer a mix of paid, free and ad-supported content and wouldn’t try to replicate traditional TV.

The service will feature shorter snippets rather than 30 or 60 minute shows. It also could include multicast programming—a sort of broadcast service that uses cellular airwaves—for delivering live content like sports and concerts, along with on-demand viewing.

That description has left a lot of room for interpretation…(read more)

WSJ

Write to Mike Shields at mike.shields@wsj.com and Thomas Gryta at thomas.gryta@wsj.com



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.