Verizon Communications is buying AOL for $4.4bn, apparently to strengthen its hand at video advertising. This comes on the back of Verizon’s existing plans to launch a video snacking service for mobes, with descriptions making it sound as though the plan will be using LTE-broadcast.
Verizon is particularly interested in AOL’s video serving technology and advertising sales capability.
Mobile infrastructure providers are always keen to point out that the demand for mobile video is insatiable and will be the major source of growth. Verizon’s FiOS TV service is available in 5.6m U.S. households, but the AOL pact seems aimed at making that more mobile. Eighteen months ago Verizon bought Intel’s OnCue service, which despite struggling had a price tag of $500m.
AOL – nobody calls it America Online any more – has gone from being an ISP to a digital media company. It was merged with Time Warner for $183bn in 2000, in what from the start was seen as dot-com madness. Then it ditched 2000 staff and was spat out again in 2009.
AOL’s 2014 revenue grew to $2.5bn with a profit of $126m. The deal will require regulatory approval and the existing CEO, Tim Armstrong, is expected to stay in place. There will be no share exchange element to the deal, which values the company at $50 a share – a significant bump up from yesterday’s close of $42.59. ®