Verizon is selling its media division, which housed its Yahoo, AOL, and advertising tech business units. The company appears to have given up on any media ambitions for now and to be putting its sole focus on its communications business.
The deal is valued at $5 billion, with Apollo Global Management acquiring the assets. Verizon will retain a 10% ownership stake in the venture which will be known as Yahoo. Current Verizon Media CEO Guru Gowrappan will continue in that role.
Many questioned the idea of Verizon investing in legacy internet brands like Yahoo and AOL, which the company spent over $9 billion to acquire over the past decade. But there was a trend with communications providers buying media assets at the time.
AT&T acquired WarnerMedia and Comcast acquired NBCUniversal during this same period. Verizon decided not to go after such high profile expensive media assets as those, but did venture into the media business. The goal at the time, Verizon said, was to build an online media unit that could compete with Google, Facebook and others for digital advertising dollars.
The strategy never panned out as hoped, but the media unit still generates 900 million monthly active users driving $1.9 billion in revenue during 1Q 2021.
“Verizon Media has done an incredible job turning the business around over the past two and a half years and the growth potential is enormous,” said Hans Vestberg, CEO, Verizon in a press release. “The next iteration requires full investment and the right resources. During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media. I have full confidence that Yahoo will take off in its new home.”
With Verizon Media gone, Verizon appears to be fully committed to its communications business, with implementing its 5G strategy front and center. That’s an expensive proposition and the $4.25 billion in cash that this Verizon Media sale (the remaining $750 million is in the form of “preferred interests”) generates will be helpful.