Verizon
announced on Monday it was selling faded internet stars Yahoo and AOL to a
private equity firm for $5 billion, ending the online media ambitions of the
telecoms giant.
The deal with Apollo Global
Management also includes the entire Verizon Media unit, including the
advertising tech operations of the two brands.
Verizon will retain a 10 percent
stake in the company, which will be known as Yahoo going forward and will
continue to be led by chief executive Guru Gowrappan, the company said in a
statement.
Verizon acquired Yahoo in 2017
for some $4.5 billion, ending the run for one of the storied brands of the
early internet. It merged Yahoo into its division with AOL, another star of the
early internet era, which Verizon acquired in 2015.
Both AOL and Yahoo lost traction
— and lofty market valuations — as internet users shifted to newer platforms
such as Google and Facebook.
Verizon had been seeking
synergies from Yahoo’s massive online presence and its other media operations
including news websites TechCrunch and the recently sold Huffington Post.
With Google and Facebook
dominating the online ecosystem, “Yahoo didn’t do things well and Verizon
wasn’t able to do much with it,” said Roger Kay, analyst at Endpoint
Technologies Associates.
“Yahoo was a fully formed entity
with its technology, and Verizon couldn’t make a bird into a fish.”
Kay said it will remain
difficult to break the ad-tech “oligopoly” of Google and Facebook, and that
prospects were uncertain for the new Yahoo.
“It may be (Apollo) will try to extract
something, and put it back on the market,” Kay said.
– New opportunities –
Executives at Verizon and Apollo
said they saw opportunities for the new Yahoo.
“We are big believers in the
growth prospects of Yahoo and the macro tailwinds driving growth in digital
media, advertising technology, and consumer internet platforms,” said David
Sambur, senior partner and co-head of private equity at Apollo.
“Apollo has a long track record
of investing in technology and media companies and we look forward to drawing
on that experience to help Yahoo continue to thrive.”
Hans Vestberg, Verizon’s CEO,
said the media unit “has done an incredible job turning the business around
over the past two and a half years and the growth potential is enormous.”
Vestberg added: “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.”
Apollo has a wide-ranging
investment portfolio including real estate, finance, and consumer brands. In
recent years it acquired the Venetian resort in Las Vegas, the Qdoba restaurant
chain, and the Fisker electric car company.
Monday’s deal marks the latest
change in ownership at AOL, whose massive valuation enabled the pioneering
internet service firm to close a deal for Time Warner in 2001, which was
unwound eight years later.
AOL operated independently,
focusing on digital media and news until it was acquired in 2015 by Verizon for
$4.4 billion.
AFP
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