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Google and Facebook Media Dominance Forces Verizon to Sell Yahoo, AOL for $5bn

BY AGENCY REPORT

Apollo Global Management is set to take over ownership of Yahoo and AOL presently owned by Verizon for a whopping sum of $5 billion.

This is just as Verizon Communications, the owner of the popular Yahoo and AOL, on Monday disclosed that it has given up on its media business and set to sell to a private equity firm Apollo Global Management for $5 billion.

According to The New York Times reports, the sale includes Verizon’s advertising technology business as well, and the company will retain a 10 per cent stake in the business, Verizon said in a statement announcing the deal on Monday.

The transaction is the latest turn in the history of two of the internet’s earliest pioneers. Yahoo used to be the front page of the internet, cataloguing the furious pace of new websites that sprang up in the late 1990s. AOL was once the service that most people used to get online.

But both were ultimately supplanted by nimbler start-ups, like Google and Facebook, though Yahoo and AOL still publish highly trafficked websites like Yahoo Sports and TechCrunch.

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The sale signals the unravelling of a strategy Verizon heralded in 2015 when it acquired the faded internet giant AOL for $4.4 billion. The purchase was meant to give Verizon a pathway into mobile, with the goal of using AOL’s advertising technology to sell ads against digital content. Verizon doubled down on that strategy in 2017 with its $4.48 billion acquisition of Yahoo, which it combined with AOL under the umbrella Oath.

But Google and Facebook have proved to be formidable competitors in the digital advertising market. Verizon acknowledged their might in 2018 when it wrote down the value of Oath by $4.6 billion, attributing the move in part to “increased competitive and market pressures” that had resulted in “lower-than-expected revenues and earnings.”

Still, the media business generates plenty of revenue. It recorded $1.9 billion in sales in the first quarter, a 10 per cent gain over last year.

Lauren Hirsch joined the New York Times from CNBC in 2020, covering business, policy and mergers and acquisitions.  Ms Hirsch studied comparative literature at Cornell University and has an M.B.A. from the Tuck School of Business at Dartmouth. @laurenshirsch

Edmund Lee covers the media industry as it grapples with changes from Silicon Valley. Before joining The Times he was the managing editor at Vox Media’s Recode.

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