Unable to compete with Google and Facebook, Verizon is selling Verizon Media — made up of Yahoo, AOL, advertising technology, and other media platform assets — for $5 billion to Apollo Global Management, Inc. Verizon will retain a 10% share in the company, which will be called Yahoo and lead by Yahoo CEO Guru Gowrappan.
According to Verizon’s announcement, this will allow Verizon Media to “aggressively pursue growth areas and stands to benefit its employees, advertisers, publishing partners and nearly 900 million monthly active users worldwide.” Gowrappan said, “The past two quarters of double-digit growth have demonstrated our ability to transform our media ecosystem.” Verizon CEO Hans Vestberg hailed Verizon Media turnaround and growth potential.
Yahoo is a recognizable brand, to be sure, with popularity among Gen Z, i.e. teenagers and twenty-somethings, as a source of general and financial news. It’s a fast growing news source on TikTok.
Under the terms of the agreement, Verizon will receive $4.25 billion in cash, preferred interests of $750 million and retain a 10% stake in Verizon Media. The transaction includes the assets of Verizon Media, including its brands and businesses. The transaction is subject to satisfaction of certain closing conditions and expected to close in the second half of 2021.
New York Times reportersLauren Hirsch and signals the unraveling of a strategy Verizon heralded in 2015″ when it bought AOL for $4.4 billion. “The purchase was meant to give Verizon a pathway into mobile, with the goal of using AOL’s advertising technology to sell ads against digital content. Verizon doubled down on that strategy in 2017 with its $4.48 billion acquisition of Yahoo, which it combined with AOL under the umbrella Oath.”
But it was not to be. Google and Facebook had too much power in the digital advertising market for even the likes of Verizon — a $128 billion company — to compete.