In a chess move that will further blur the lines between content and networks, Verizon announced this morning an agreement to buy AOL. They will be paying $50 per share for about $4.4B in cash, a 17% premium for AOL’s stockholders.
Imagine it’s 2000, and Verizon was out there buying AOL. It would have been a vastly different acquisition than it is today, aimed at a dialup access empire. Today’s AOL is about content and digital advertising, with familiar online brands like the Huffington Post, Engadget, and TechCrunch as well as a mobile advertising focus and some original video as well. With no inorganic expansion available in the US mobile world, Verizon is clearly looking to add on more of the surrounding ecosystem of data it already delivers over its mobile networks.
To get into content, the inorganic path is far easier for Verizon. After all, they tried starting their own tech news and commentary site last year with SugarString. But that bombed quickly after reports that from day one the site’s writers had their hands tied on subjects like net neutrality or NSA wiretapping. With the AOL deal, they acquire some of the biggest names in tech journalism intact, and presumably they learned that lesson and won’t be interfering again in that way.
But while the content may be the most visible part of this deal, the critical piece for Verizon is probably the mobile advertising and video piece. How they integrate that into their empire will say a lot about the next stage of development of our wireless networks.
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Categories: FTTH · ILECs, PTTs · Mergers and Acquisitions · Wireless
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I am not the sharpest bulb in the drawer but who really believes VZ will leave Huffington Post alone? My guess is that it will become an online Fox news rehash. Content will now reflect VZ’s political and business views and goals. Where do we go for daily news other than the NYT? News outlets have been consolidated into fewer and fewer corporate hands. I don’t think that VZ will attempt to trash the world as badly as the Murdoch empire does but we will be subject to controlled political and economic comment. Non-conservatives begone.
Some are suggesting they’ll divest it. http://finance.yahoo.com/news/verizon-could-spin-off-huffington-123200080.html
That would make sense Rob. Thanks for the insight.
Really looking forward to seeing the future of technology journalism especially when it comes to Huffington Post, Engadget, and TechCrunch.
i would have preferred that they spend the $4.4B on making their phones work better – especially VoLTE so they can compete with their GSM competitors (advanced services, talk & browse, etc). they may want to get some LTE-focused “can you hear me now” guys since no one can hear them now.
but it’s still the best tracking device around…..
If Vz wants to be successful in content and ad tech, then they need to embrace the hoodie and jeans culture in Basking Ridge.
Lowel could easily get wall st to double the stock price by having everyone in Basking Ridge show up in jeans everyday. Then anounce Vz is a tech company and no longer a utility. That they are going to starting thinking and acting like innovators instead of rent collectors.
As currently constituted, telcos are incapable of significant innovation. They can’t even get SDN going and that’s the closest chance they have. Even the startups who say they are doing end up caving.
ok but not sure a wardrobe change will turn Bell Atlantic into a tech company. Think they are still working on going from Bell Monopoly to Bell Company with a few Competitors. Getting to “Regular Company that Competes” will be a step in the critical path before “funky tech company” with hoodies. Not sure AOL helps much anyways, as their customers are 80 and everyone who could leave already did