Verizon Sells Yahoo and AOL for $5 Billion

Photo by Bloomberg

[Asia Economy Reporter Yujin Cho] U.S. telecommunications company Verizon is selling its media division, which includes Yahoo and America Online (AOL), to a private equity firm for $5 billion (approximately 5.615 trillion KRW).

On the 3rd (local time), Bloomberg reported that private equity firm Apollo Global Management has agreed with Verizon to acquire Yahoo and AOL under these terms.

Verizon will transfer 90% of the media division's shares for $4.25 billion in cash and $750 million in preferred stock, while retaining the remaining 10% stake.

Verizon is expected to use the cash secured from this sale to expand its 5G business. Earlier, Verizon announced plans to invest $53 billion this year to secure licenses and lead the 5G market.

Major foreign media outlets such as the WSJ evaluated this sale as Verizon’s move to escape from an "expensive and unsuccessful run."

Facing stagnation in its core mobile communications business, Verizon acquired AOL for $4.48 billion in 2015 and Yahoo for $4.8 billion in 2017, launching the integrated media group Oath.

The plan was to combine AOL’s strength in media content and Yahoo’s strength in online advertising with the mobile business to secure new revenue streams, but it failed to produce significant results due to competition from Google and Facebook.

The combination of Yahoo and AOL, established in the early days of the internet, was insufficient to capture the attention of a market that had already shifted to mobile.

Due to poor performance and the impact of COVID-19, last year’s revenue was $7 billion, down 5.6% from the previous year, falling short of the management target of $10 billion.

As performance worsened, Verizon undertook restructuring efforts, including workforce adjustments in the division and selling off Huffington Post and Tumblr to reduce costs.

Accordingly, Verizon wrote down the value of Yahoo and AOL to half of the acquisition price in its 2018 financial statements.

On the New York Stock Exchange that day, Verizon’s stock closed up 0.22% at $57.92. Year-to-date, Verizon’s stock price has risen only about 3% compared to the closing price of $56.24 on May 4 last year.

This content was produced with the assistance of AI translation services.