Verizon shocked the world this week, announcing that America Online (AOL) was still in business. Even more shocking was the fact that Verizon valued the company at approximately $4.4 billion. This is the amount the company has agreed to pay to acquire the company and all of its assets.
As it turns out, those assets are far more valuable than the company itself, including patents in the online advertising space and content delivery. Verizon is in the process of enhancing its LTE video business, and Verizon plans to use AOL's content delivery platform, as well as their advertising services, to accomplish this goal.
AOL is more than just video and ads, though. You may remember that in 2011, AOL purchased Huffington Post, and appointed Arianna Huffington president and editor-in-chief. This put her in charge of brands such as TechCrunch, Engadget, Joystiq and more. This transition did not do well, and many people the company made promises to were lied to, and Huffington was removed a year later.
Tim Armstrong, AOL chairman and CEO, will continue to serve in those roles, as the acquired AOL will continue to operate as a separate division inside of Verizon. He said of the acquisition,
Verizon is a leader in mobile and OTT connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers. The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video.
Obviously Verizon sees something in the company that the rest of the world does not. Lowell McAdam, Verizon chairman and CEO, said,
Verizon's vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience...
AOL has once again become a digital trailblazer, and we are excited at the prospect of charting a new course together in the digitally connected world. At Verizon, we've been strategically investing in emerging technology, including Verizon Digital Media Services and OTT, that taps into the market shift to digital 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.
It will be interesting to see what happens with this acquisition. Hopefully it will go better than when AOL purchased Time Warner and drove it to such heights that it was almost purchased by Comcast.