Verizon Reportedly Approaches AOL For Acquisition
We are about to see yet another entrepreneurial merger as Verizon Communications Inc. is said to approach AOL Inc. for a potential acquisition or joint venture to expand its mobile-video offering.
Bloomberg News was the first to report on the possible takeover deal. The publication also offered a reason as to why Verizon is eyeing on AOL.
According to the report, Verizon is basically interested in AOL’s programmatic advertising technology — the automated buying and selling of ads online. This can be molded into an online video product in the future by both companies. The takeover would also lead to an addition in paying subscribers and Internet properties.
However, there hasn’t been any formal proposal made so far, the report said.
Verizon is looking for expertise in three areas: online content, mobile video and advertising. So a venture rather than a takeover would be able to fulfill all requirements.
“Verizon needs a digital response and AOL has shown the best strategic foresight of navigating the digital-video world,” said Laura Martin, a senior analyst at Needham & Co. “Verizon can buy or build that, but it’s unlikely to build it fast enough.”
Verizon is also seeking to join hands with AT&T as wireless providers enhance Verizon’s offerings. Last year, AT&T struck a $48.5 billion deal to acquire satellite TV provider DirecTV.
However, with a takeover, Verizon would get AOL’s 2.3 million paying members, and Internet brands like TechCrunch and Engadget. These two media platforms grab more than 200 million unique visitors a month, landing them the fourth position in the U.S. – behind Google, Yahoo and Facebook.
We all have a nostalgic attachment with AOL as it was one of the main portals to access the Internet in the early days. Its popularity shot up when collaborated with Time Warner 15 years ago, but soon began losing the race to faster services of telephone and cable TV.
Surprisingly enough, some AOL members still use its dial-up Internet service, though the company is wrapping up that business. So if Verizon acquires AOL, it could switch those customers to its FiOS broadband service.
Three executives from Verizon have been dedicated to help in developing a mobile-video service and integrating their acquired technology – OnCue, from Intel and EdgeCast Networks. Meanwhile, AT&T and the Chernin Group had announced a joint venture to develop online-video services in April 2014.
The main motivation behind this move from Verizon is to utilize AOL’s automatic purchase of placements on websites and videos. With the Internet providing an illimitable space for placing ads, marketing companies face the dilemma of ensuring their ad reaches to their targeted audience. This problem is what AOL’s technology is going to be used for solving.