Verizon sells AOL and Yahoo to private equity fund Apollo for $5B

AOL and Yahoo are being sold again, this time to a private equity firm.

Wireless company Verizon will sell Verizon Media, which consists of the once-pioneering tech platforms, to Apollo Global Management in a $5 billion US deal.

Verizon said Monday that it will keep a 10 per cent stake in the new company, which will be called Yahoo.

Yahoo at the end of the last century was the face of the internet, preceding the behemoth tech platforms to follow, such as Google and Facebook. And AOL was the portal, bringing almost everyone who logged on during the internet’s earliest days.

Verizon spent about $9 billion US buying AOL and Yahoo over two years starting in 2015, hoping to jump-start a digital media business that would compete with Google and Facebook. It didn’t work — those brands were already fading even then — as Google and Facebook and, increasingly, Amazon dominate the U.S. digital ad market.

The year after buying Yahoo, Verizon wrote down the value of the combined operation, called “Oath,” by roughly the value of the $4.5 billion it had spent on Yahoo.

In late 2020, Verizon Media sold off HuffPo to Buzzfeed, who almost immediately laid off staff and shut down international sites including Canada’s.

Verizon has been shedding media assets as it refocuses on wireless, spending billions on licensing the airwaves needed for the next generation of faster mobile service, called 5G. It sold blogging site Tumblr in 2019 and HuffPost to BuzzFeed late last year. The digital media sector in recent years has been consolidating as companies seek profitability.

The properties Verizon is selling include Yahoo Finance, Yahoo Mail and the tech blogs Engadget and TechCrunch.

Despite its difficulty competing with tech giants for ad dollars, leading to cost cuts and layoffs, Verizon Media’s revenue rose 10 per cent in the most recent quarter from the year before, to $1.9 billion. The division still has nearly 900 million monthly users, and generated $7 billion in revenue in 2020, according to Verizon and Apollo.

Apollo says they are “big believers in the growth prospects of Yahoo” and expects that overall growth in digital advertising will boost Yahoo too, said Apollo senior partner David Sambur in a prepared statement. Apollo has invested in other media and tech companies like the photo website Shutterfly and TV and radio stations formerly owned by Cox.

Financial firms have played an increasingly prominent role in traditional media as well in recent years as the newspaper industry struggles with the decline of print advertising, buying up chains and slashing costs and jobs.

Verizon will receive $4.25 billion in cash, preferred interests of $750 million and the minority stake.

The deal is expected to close in the second half of the year.

Shares of Verizon Communications Inc., based in New York, rose less than 1 per cent Monday.

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