After years of speculation following the company’s separation from then-parent Time Warner back in 2010 on potential mergers, a new corporate home has been named for Aol.
And that company? Verizon.
Verizon buying Aol may not be a huge shock — rumors began circulating of the two companies’ being “in talks” back in January — but it deviates from long-standing talk that a company like Yahoo would be involved in some sort of partnership. In fact, word of Yahoo’s potential investment in Aol resurfaced just last September.
For Aol, remaining as a stand-alone entity probably wouldn’t have been a long-lasting plan. While the company has put a major focus in the programmatic ad tech side of the house (a growing division), its platforms biz is still losing money — to the tune of $10 million in Q1 of this year. The company’s “brand group” (which includes its owned & operated properties, like Huffington Post & TechCrunch) and, believe it or not, dial-up business are Aol’s largest revenue drivers.
From the Verizon side of things, the company has been planning on launching video content this Summer — the timing of the acquisition is perfect, then, as Aol already has the infrastructure to help get Verizon video off the ground technically; and the company’s large ad sales staff will be able to Verizon monetize their content from the start.
Verizon is also in a unique position to help convert Aol’s $180 million subscription business — meaning, those still on dial-up — to broadband services, given the company already has the capabilities in place.
As an employee of Aol when CEO Tim Armstrong took over, and the company split from Time Warner, I feel for those at Aol uncertain about what this merger means for them. While Armstrong attempted to quell insecurities within Aol staff with an early-morning memo, those of us around back in 2010 remember similar emails & all-hands meetings saying basically the same thing — right before 33% of the workforce was let go.
More details on the Verizon acquisition of Aol are certain to be revealed in the coming weeks.