In an announcement Tuesday, Verizon Communications said it would acquire AOL for $4.4 billion cash, the New York Times reports.
AOL, considered at one point to be a media juggernaut, bought Time Warner for $165 billion 15 years ago. Now, the largest mobile phone operator will acquire the “king of media” for a fraction of the price. According to the Times, AOL “is a shadow of its former self, managing a small collection of media and technology properties,” the site writes.
A boost from Verizon, while certainly beneficial for the company, may also change AOL’s trajectory.
Verizon is billing the deal as a way for the company to expand its video offerings. Already a leader in distributing mobile video through its robust national mobile phone network, Verizon is making a push to become a leader in so-called over-the-top video, shorthand for television content distributed through the Internet.
But in acquiring AOL, Verizon is buying much more than websites that host streaming content. Along with its video and online advertising technology, AOL owns The Huffington Post, a sprawling collection of international news websites with growing traffic. It also manages a dwindling but profitable dial-up Internet business, providing online access for those who live in areas too remote to have broadband, or who never canceled their subscriptions.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” Lowell C. McAdam, Verizon’s chief executive, said in a statement. “This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”
The deal is a win-win for AOL chairman and chief executive Tim Armstrong, who told the Times that visions of both companies 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,” he added.
Verizon is set to pay $50 a share for AOL. You can read more on the major acquisition here.
SOURCE: NYT | VIDEO SOURCE: NDN | PHOTO CREDIT: Getty