Verizon to Buy AOL for $4.4 Billion

Verizon to Buy AOL for $4.4 Billion


Verizon Communications Inc. announced Tuesday that it has agreed to a deal to buy AOL Inc. for $4.4 billion.

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The agreement puts the purchase price at $50 per share, according to a release.

“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” Lowell McAdam, Verizon chairman and CEO, said in the release. “This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”

According to a memo obtained by TechCrunch (which is owned by AOL) from Chairman and CEO Tim Armstrong, AOL had been “building toward becoming the largest media technology company in the world. While there are search platforms, social platforms, and commerce platforms, we have built a very meaningful media platform and AOL today is a media platform company powering our brands and the brands of over 30,000 partners.”

But to grow bigger, it continues, it has to establish a presence in the mobile arena. “Mobile will represent 80% of consumers’ media consumption in the coming years and if we are going to lead, we need to lead in mobile,” he added.

But Verizon also benefits in the deal, with The Verge noting that the company will not only gain access to AOL’s large supply of content, but also its advertising expertise to monetize its LTE wireless video and other over-the-top video services, as well as a potential to convert the 2.1 million people who still use AOL’s dial-up Internet service into users of Verizon’s broadband services.

The move could also be a good survival tactic for both companies. With Facebook’s responsible for driving so much traffic to content–within its mobile app and in general–the team up could secure AOL content and advertising is seen by the large number of Verizon customers. It also likely means that, if they aren’t already, AOL’s content sites will fully embrace mobile-friendly practices so that they can get a sizable chunk of that 80% of Web traffic being directed via mobile devices.