Verizon Agrees to Acquire AOL for Mobile Video Content and IoT Push
In a significant move for the digital technology landscape, it has today been announced that Verizon Communications Inc. has agreed to purchase AOL Inc., for an estimated value of around £2.8billion ($4.4bn).
Already the largest mobile phone operator in the US with more than 130 million subscribers, this acquisition will contribute towards Verizon's goal of building digital and video platforms to drive future growth, and accelerating its LTE wireless and OTT video strategies.
The agreement will also support and propel Verizon's IoT platforms, creating a bridge between wireless and IoT for the consumer market and the enterprise.
AOL is a leader in the digital content and advertising platforms space, and will be leveraged by Verizon to create a scaled, mobile-first offering aimed at what eMarketer estimates is close to a $600billion global advertising industry.
Some of AOL's notable assets which will likely come into play include its subscription business; its premium portfolio of global content brands, including The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com, as well as its millennial-focused OTT, Emmy-nominated original video content; and its programmatic advertising platforms.
"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," said Lowell McAdam, Chairman and CEO of Verizon.
"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," continued McAdam.
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. Tim Armstrong, AOL Chairman and CEO, will continue to lead AOL operations after closing.
"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," added Armstrong.
Verizon is developing a promising business in distributing mobile video through its national mobile phone network, and will use this deal to make an additional push to become a leader in digital content and advertising. Through this acquisition, Verizon will offer its customers media as well as mobile connectivity.