We just got word that Verizon is going to acquire AOL for an agreed share price of 50 USD per share with a total of approximately 4.4 billion USD for all shares. By doing this Verizon is able to further support their strategies on building a scaled digital media platform for consumers, advertisers and partners.
Taking in the developed businesses of AOL they will be able to further drive LTE wireless video and OTT (over-the-top video) and will also be supporting IoT platforms, in the plan to transform wireless to IoT consumers and businesses. The combination of Verizon and AOL creates a scaled, mobile-first platform offering directly targeted at what eMarketer estimates is a nearly 600 billion USD global advertising industry.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform. 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.”
– Lowell McAdam, Chairman and CEO of Verizon
Verizon’s Business Model to Date
Verizon is one of the primary mobile carriers in the US. Next to a variety of professional services offered to enterprises they are mostly known for providing people with phones and service plans.
History of AOL
America Online (AOL) was one of the earliest internet service providers, even before the internet became a popular thing for everyday consumers. You might remember them putting disks and later CDs in magazines to distribute their software to users along with an amount of free internet minutes. Yes, there was a time when the internet was billed against how long you have been connected to the internet before it was all a monthly flat price.
AOL lost market share when the internet revolutionized itself around them at the end of the 90s. However they have managed to adopt their business models to the new environments and put focus on media publishing and advertising.
“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. 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.”
– Tim Armstrong, Chairman and CEO of AOL
Near Future Expectations and Assumptions
Analyzing this deal we can notice a strong emphasis on mobile and video content to play a major role in the future of media publishing and advertising. At the moment Verizon does not plan disruptive changes in the organization of AOL. Tim Armstrong, AOL chairman and CEO, will continue to lead the AOL business operations after closing the acquisition.
The transaction will take the form of a tender offer followed by a merger, with AOL becoming a wholly owned subsidiary of Verizon upon completion. This process is subject to customer regulatory approvals and will most likely be completed this summer.
List of Subsidiaries
Subsidiaries of Verizon are:
Diamond State Telephone
New Jersey Bell
Bell of Pennsylvania
The Chesapeake and Potomac Telephone Company
International Computer Security Association
Subsidiaries of AOL are:
The Huffington Post
Third Screen Media
AOL Canada Corp
Personal Library Software
CompuServe Interactive Services
Photo credit: Mike Mozart