Verizon to buy AOL for $4.4bn for mobile video, advertising

The telecoms giant is planning to acquire AOL to help it get a leg up in mobile video.

AOL's current CEO Tim Armstrong will remain in place. Image: Damon Dahlen, AOL

Verizon has announced plans to buy media group AOL for $4.4bn.

The deal, announced on Tuesday, sees the telcoms giant offering $50 per share for AOL, whose properties include the Huffington Post, TechCrunch, and Engadget. However, the telecoms giant is more interested in what AOL can bring to the table with content delivery.

"Verizon's acquisition further drives its LTE wireless video and OTT (over-the-top video) strategy. The agreement will also support and connect to Verizon's IoT (Internet of Things) platforms, creating a growth platform from wireless to IoT for consumers and businesses," the company said in a statement.

According to Verizon CEO Lowell C. McAdam, the acquisition ties into the company's recent focus on content and advertising. "AOL's advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams," he said.

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Prior to the AOL offer, Verizon had already been bulking up its mobile video services, buying Intel's OnCue business earlier this year. The telco said it plans to launch its own mobile video service later this year, and presumably will now be adding AOL content to that offering. AOL has been making original video for a number of years, often viral and reality-TV based.

The deal is expected to close this summer, pending regulatory approval.

AOL's current CEO Tim Armstrong will remain in place to lead the wholly-owned subsidiary after the acquisition is completed.

For the first quarter of this year, AOL made revenues of $625m, up seven per cent year on year, while profit fell one percent to $24m. AOL attributed rising revenue to growth in its advertising business.

AOL started life as an ISP selling dial-up access, and announced its merger with Time Warner in 2000. The pair later demerged when AOL was spun off as a separate company in 2009.

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