Verizon is Buying Aol

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.

Image via CNBC

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.

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