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 deal. Verizon said Monday that it would keep a 10 percent stake in the new company, called Yahoo.
At the end of the last century, Yahoo 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 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 — like Google and Facebook, and, increasingly, Amazon dominate the US 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.
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.
Verizon’s properties 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 percent in the most recent quarter from the year before to $1.9 billion. According to Verizon and Apollo, the division still has nearly 900 million monthly users and generated $7 billion in revenue in 2020.
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.
Apollo is betting that the Yahoo division’s data collects from its users, who log in to products like email, appeal to advertisers as ad-tracking technology changes, said Forrester analyst Joanna O’Connell.
Financial firms have played an increasingly prominent role in traditional media 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 percent Monday.