Verizon barges into online video, buying AOL
NEW YORK – 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 entry into increasingly competitive online and mobile video. The New York company is the country’s largest wireless carrier as well as an Internet and TV provider – and wireless video and targeted advertising is seen as the next battleground for customers.
The move comes as the media landscape is increasingly being disrupted on several fronts as more TV watchers stream shows online and through their smartphones and tablets. AOL offers an advertising sales and display network that made it an acquisition target.
“AOL’s focus on unifying the advertising experience across display, video, mobile and TV makes it an attractive asset because advertisers are looking for better ways to reach their audience across screens,” said Lauren Fisher, analyst at eMarketer. “Coupled with Verizon’s existing mobile (and streaming video) presence, the companies’ combined ad offerings mean massive cross-screen reach with much richer audience data.”
Increasingly, companies like Verizon and Google are looking to connect the video and other content viewers want, the digital “pipes” that deliver the content and the advertising networks that support it.
Verizon said last month it was preparing to launch a video service over the summer for mobile devices. It also recently began offering various levels of cable service rather than one big cable package, which has been the norm.
That has put Verizon at odds with major content companies like ESPN as it sees more customers cut the cord in favor of video that is streamed online.
Verizon will gain access to AOL’s advanced advertising technology, including its “One by AOL” integrated platform. AOL reported a 7 percent boost in revenue during its first quarter, mainly on strong global advertising sales.
It also gains control over significant AOL content, including cultural and political website the Huffington Post, and also TechCrunch. AOL is the nation’s fourth-largest online property with about 200 million monthly consumers of its premium brands, according to its website.
Verizon Communications Inc. will pay $50 in cash for each share of AOL Inc., also based in New York, a 15 percent premium to its closing price Monday.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” chairman and CEO Lowell McAdam said in a printed statement.
The deal is expected to close this summer. Tim Armstrong, AOL chairman and CEO, will continue to lead that company.
Verizon has 108.6 million wireless customers, 5.7 million FiOS video subscribers and 6.7 million Internet subscribers. It operates in 150 countries.