AOL and Yahoo are sold again, this time to a private equity firm.
Wireless company Verizon will sell Verizon Media, which consists of the once groundbreaking technology platforms, to Apollo Global Management for $ 5 billion.
Verizon said Monday it will retain a 10% stake in the new company, which will be called Yahoo.
Yahoo was the face of the Internet at the end of the last century, which preceded giant tech platforms like Google and Facebook. And AOL was the portal that brought almost everyone who signed up in the earliest days of the internet.
Verizon spent around $ 9 billion over a two-year period buying AOL and Yahoo as of 2015 in hopes of building a digital media business that would rival Google and Facebook. It didn’t work – those brands were already fading back then – as Google, Facebook and, increasingly, Amazon dominate the US digital ad market. In the year following its purchase of Yahoo, Verizon listed the value of its combined business, called “Oath,” at approximately the value of the $ 4.5 billion it had spent on Yahoo.
Verizon has lost media resources as it refocuses on wireless networks and spends billions on licensing the radio waves required for the next generation of faster mobile services called 5G. It sold the blogging site Tumblr in 2019 and HuffPost to BuzzFeed late last year. The digital media sector has consolidated in recent years as companies seek profitability.
Properties Verizon sells include Yahoo Finance, Yahoo Mail, and tech blogs Engadget and TechCrunch.
Despite the difficulty of competing for advertising dollars with tech giants, resulting in cost reductions and layoffs, Verizon Media’s revenue rose 10% year over year to $ 1.9 billion in the most recent quarter. According to Verizon and Apollo, the division still has nearly 900 million monthly users and had sales of $ 7 billion in 2020.
Apollo says it “strongly believes in Yahoo’s growth prospects” and expects the overall growth of digital advertising to also fuel Yahoo, 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 television and radio stations formerly owned by Cox.
Apollo is betting that the data the Yahoo division collects from users who sign up for products like email will appeal to advertisers when ad tracking technology changes, said Forrester analyst Joanna O’Connell.
Financial firms have played an increasingly important role in traditional media over the past few years as the newspaper industry grapples with the decline in print advertising, chain buy-outs, and cost and job cuts.
Verizon will receive $ 4.25 billion in cash, preferential shares of $ 750 million and the minority interest.
The deal is expected to close in the second half of the year.
New York-based Verizon Communications Inc. shares rose less than 1% on Monday.