After days of negotiations and rumors, Verizon today announced that it has reached a deal to sell its media assets to private equity firm Apollo Global Management for $ 5 billion. The deal includes $ 4.25 billion in cash and $ 750 million in preferred interest. It will also allow Verizon to keep 10% of the business, but its divestment means a formal pullback for the telecom giant away from its costly efforts to play a larger role in the efforts to own, create and monetize content. above his own and the others. networks. The new company, known simply as Yahoo, will continue to be led by current CEO Guru Gowrappan.
The price Apollo paid is in line with reports of the deal in recent days, which collectively put it at around $ 4 billion to $ 5 billion.
These numbers may seem large, but not compared to what Verizon originally paid: a total of $ 9 billion + respectively first for AOL in 2015, then Yahoo in 2017.
The first deal brought AOL and its various media titles – including The Huffington Post, TechCrunch, Engadget – under the umbrella of VZW, while the last added Yahoo’s iconic search portal with a listing of Yahoo and Tumblr services. , resulting in a curious mix of newer services aimed at a younger audience, mixed with a number of legacy internet properties, plus experimental efforts added to the mix.
After the acquisition, the two companies merged under a new brand, Oath, as part of a larger strategy that Verizon was to develop a media empire to help it take on the advertising giants in line like Google and Facebook, with the operation led by Tim Armstrong, who was the longtime CEO of AOL when acquiring Verizon.
In the end, it never really played out the way Verizon thought it would, or at least not as quickly as it had hoped.
Hans Vestberg – a longtime telecommunications executive who joined Verizon as CTO in 2017 – became CEO in June 2018. In doing so, he essentially inherited a digital media business strategy that he didn’t had no hand in construction.
“Verizon Media has done an incredible job of turning the business around over the past two and a half years and the growth potential is enormous,” Vestberg said in a press release. “The next iteration requires total investment and the right resources. During the strategic review process, Apollo presented the strongest vision and strategy for the next phase of Verizon Media. I have no doubts that Yahoo will take off in its new home. “
Less than six months after taking the lead, Armstrong had left the company (to be replaced by Guru Gowrappan, who still heads the media business); then Verizon reduced the value of its media assets to $ 4.6 billion, noting that Oath “experienced increased competitive and market pressures throughout 2018, resulting in lower revenues and profits than expectations. ”
And the Oath name was short lived, with Verizon adopting a much simpler name, Verizon Media, in January 2019.
Other movements occurred in increments. In August 2019, the company sold the blogging platform Tumblr to WordPress owner Automattic for what was then described as a “nominal” price.
Then at the end of last year, as the media world suffered from a lack of advertising revenue amid the COVID-19 pandemic, Verizon sold the HuffPost to Buzzfeed, coupled with a stock investment in the company. digital media and an advertising and syndication agreement. And there have been several layoffs to reduce broad media operations.
Since the HuffPost transaction, rumors around Verizon’s plans to dispose of its remaining media assets have intensified. (Although, again, there had been reports of a possible sale for years before.)
However, that is not the whole story. Despite a difficult year for online publishing, Verizon Media began to see a rebound earlier this year, marking a 12% year-over-year increase in revenue for the first quarter. This is good news in the near term that may ultimately have better positioned telecoms for a sell off.
Founded in 1990, Apollo has a wide and diverse range of assets, including the recently purchased Venetian resort in Las Vegas and the craft giant, Michael’s. It also has a fairly wide range of holdings in the telecommunications, media and tech sector, including ADT, Coinstar, radio and television conglomerate Cox Media, with some assets going private but transformed into state-owned companies (Rackspace, another Apollo investment, is an example). In other words, the precise form a company like Verizon Media would take as part of the Apollo portfolio is still a question mark.
“We strongly believe in Yahoo’s growth prospects and favorable macro winds for the growth of digital media, advertising technology and consumer internet platforms,” said David Sambur, senior partner at Apollo, in the release. . “Apollo has a long history of investing in technology and media companies and we look forward to leveraging that experience to help Yahoo continue to prosper.”
The agreement is subject to review by the standard regulator. It should close in the second half of the year.