Wed, Jan 07, 2015 - Page 15 News List

Verizon mulling acquisition of AOL

Bloomberg

Verizon Communications Inc has approached AOL Inc about a potential acquisition or joint venture with the Internet company to expand its mobile-video offerings, people with knowledge of the matter said.

Verizon hasn’t made a formal proposal to AOL, and no agreement is imminent, said the people, who asked not to be named because the discussions are private.

Verizon’s primarily interested in AOL’s programmatic advertising technology — the automated buying and selling of ads online — which two people said could be paired with a future online video product. With a takeover, it would also gain Internet properties including The Huffington Post and subscribers who pay for Internet access.

Just a few years after AOL’s failed marriage with Time Warner Inc ended in its spinoff, chief executive officer Tim Armstrong has transformed the Web portal into a different company.

A venture would allow Verizon to focus on the advertising technology as the company seeks expertise in three areas: online content, mobile video and advertising, one person said. The company has also held talks with several of AOL’s peers about how to bolster those businesses.

Research firm EMarketer Inc projected in July that mobile advertising would lead last year’s rise in total media ad spending in the US, with advertisers spending 83 percent more on tablets and smartphones than they did in 2013 — an increase of US$8.04 billion.

Verizon is looking to catch up with AT&T Inc, as wireless providers enhance their offerings. AT&T last year struck a US$48.5 billion deal to acquire satellite TV provider DirecTV.

In a takeover, Verizon would also gain AOL’s 2.3 million paying members, in addition to Internet brands including The Huffington Post, TechCrunch and Engadget. It is unclear if Verizon is interested in those media properties, which draw more than 200 million unique visitors a month — the fourth-most in the US, behind Google Inc, Yahoo Inc and Facebook Inc, according to November data from researcher ComScore Inc.

Spokespeople for Verizon and AOL declined to comment.

Verizon is still paying off debt from buying Vodafone’s 45 percent stake in Verizon Wireless last year for US$130 billion, and the company is stockpiling cash to acquire wireless spectrum in an auction that began in November of last year. Both could hamper the New York company’s ability to make an acquisition, two people said.

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