Verizon sells AOL and Yahoo to private equity fund Apollo for $ 5 billion

Verizon sells AOL and Yahoo to private equity fund Apollo for $ 5 billion

AOL and Yahoo are sold again, this time to a private equity firm.

Wireless company Verizon will sell Verizon Media, which includes once-pioneering technology platforms, to Apollo Global Management in a US $ 5 billion deal.

Verizon said Monday it would retain a 10% stake in the new company, which will be called Yahoo.

Yahoo at the turn of the last century was the face of the internet, preceding the giant tech platforms to follow, such as Google and Facebook. And AOL was the portal, bringing together almost everyone who logged on during the early days of the Internet.

Verizon spent around US $ 9 billion to buy AOL and Yahoo over two years starting in 2015, hoping to jumpstart a digital media company that would compete with Google and Facebook. It didn’t work – those brands were already disappearing back then – as Google and Facebook and, increasingly, Amazon dominated the digital advertising market in the United States.

The year after the Yahoo purchase, Verizon noted the value of the combined operation, called “Oath,” roughly the value of the $ 4.5 billion it had spent on Yahoo.

At the end of 2020, Verizon Media sold HuffPo to Buzzfeed, which almost immediately laid off staff and shut down international locations, including Canada.

Verizon lost its media assets by refocusing on wireless, spending billions to license the radio waves needed for the next generation of faster mobile service, called 5G. He sold the blogging site Tumblr in 2019 and HuffPost to BuzzFeed late last year. The digital media industry has consolidated in recent years as companies seek profitability.

Properties that Verizon sells include Yahoo Finance, Yahoo Mail, and the technical blogs Engadget and TechCrunch.

Despite struggling to compete with tech giants for advertising dollars, resulting in cost cuts and layoffs, Verizon Media’s revenue grew 10% in the last quarter over the year. previous year, to reach $ 1.9 billion. The division still has nearly 900 million monthly users and generated $ 7 billion in revenue in 2020, according to Verizon and Apollo.

Apollo says they “strongly believe in Yahoo’s growth prospects” and expects overall growth in digital advertising to boost Yahoo as well, Apollo senior partner David Sambur said in a prepared statement. Apollo has invested in other media and technology companies such as the Shutterfly photo website and TV and radio stations formerly owned by Cox.

Financial firms have also played an increasingly important role in traditional media in recent years, as the newspaper industry grapples with the decline of print advertising, buying channels and cutting costs and costs. jobs.

Verizon will receive $ 4.25 billion in cash, $ 750 million preferred interest and minority interest.

The deal is expected to be concluded in the second half of the year.

Shares of New York-based Verizon Communications Inc. rose less than 1% on Monday.

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