US Verizon Sells Yahoo and AOL

Photo by Bloomberg

[Asia Economy Reporter Yujin Cho] U.S. telecommunications company Verizon is reportedly pursuing the sale of its media division, which includes Yahoo and America Online (AOL), according to the Wall Street Journal (WSJ) on the 28th (local time).

Anonymous sources stated that private equity firm Apollo Global Management and others are participating as buyers, with the sale price estimated to be between $4 billion and $5 billion.

Regarding this sale, WSJ evaluated it as a move by Verizon to exit an expensive and failed bet.

As Verizon faced growth stagnation in its core mobile communications business, it acquired AOL for $4.48 billion in 2015 and Yahoo for $4.8 billion in 2017, launching an integrated media group called 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 achieve significant results due to pressure from Google, Facebook, and others. The merger of Yahoo and AOL, established in the early days of the internet, was insufficient to capture the interest 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 results worsened, Verizon has been conducting restructuring efforts, including workforce adjustments in the division and selling off Huffington Post and Tumblr to reduce costs.

Verizon is expected to invest the proceeds from this sale into 5G investments. Earlier, Verizon announced plans to invest $53 billion this year to secure licenses and lead the 5G market. Verizon intends to spend $21.5 billion this year alone on essential equipment such as 5G network gear and fiber optic cables.