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Verizon sells media companies including Yahoo and AOL to Apollo for $ 5 billion

Verizon will sell its media group to private equity firm Apollo Global Management for $ 5 billion, the companies said on Monday. The sale allows Verizon to offload properties from the former Internet empires of AOL and Yahoo.

Verizon will retain a 10% stake in the company and will be renamed Yahoo.

The sale will see online media brands under the old Yahoo and AOL umbrellas like TechCrunch, Yahoo Finance and Engadget go to Apollo at valuations far lower than they commanded just a few years ago. Verizon bought AOL for $ 4.4 billion in 2015 and Yahoo two years later for $ 4.5 billion.

Verizon will get $ 4.25 billion in cash from the sale as well as its 10% stake in the company. Verizon and Apollo have said they expect the transaction to close in the second half of 2021.

There has been growing evidence recently that Verizon wanted to sell its multimedia properties and instead focus on its wireless networks and other ISP businesses. Last year, Verizon sold HuffPost to BuzzFeed. It also recently sold or closed other media properties such as Tumblr and Yahoo Answers.

Prior to that, Verizon’s original vision was to turn Yahoo and AOL properties into online media giants that could take the dominance of Google and Facebook in online advertising. Under former AOL CEO Tim Armstrong, the Yahoo and AOL brands converged into a new online media division within Verizon called Oath.

But the Oath project was largely unsuccessful in gaining momentum and Armstrong left the company in 2018. Oath was re-renamed Verizon Media Group in November 2018 and was led by Guru Gowrappan. Gowrappan will continue to run Yahoo under Apollo.

With the sale of Yahoo and AOL, Verizon has signaled that it is no longer interested in the media, unlike its competitors. AT&T is still trying to make WarnerMedia a streaming competitor for Netflix and Disney, even though it is grappling with heavy debts resulting from its media acquisitions. Comcast, another ISP, is still in the media business with NBCUniversal.

The sale of Verizon Media to Apollo marks the latest turning point in decades of roller coasters for AOL and Yahoo, two of the most dominant forces in the early days of the mainstream Internet. After leaving Time Warner, AOL struggled under Armstrong, despite bold bets on digital media properties like HuffPost and the network of local news sites called Patch.

Yahoo has endured its own hardships over the past decade. After burning several CEOs, Yahoo brought in Google’s Marissa Mayer to lead the company. Mayer made big bets on Yahoo, including reformatting its news properties like Yahoo Finance and buying the popular blogging platform Tumblr for over $ 1 billion. But Mayer’s Yahoo failed to live up to its ambitions, its valuation plummeted, and it was eventually sold to Verizon.

Under Apollo, Verizon’s legacy media properties will be challenged to grow and become profitable in order to attract another sale or exit down the road.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.