Verizon exits the media business in $5bn deal

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After six years, Verizon is getting out of the media game. The communications giant is selling off Verizon Media Group to private equity firm Apollo Global Management for $5bn.

The $5bn deal will see Apollo pay Verizon $4.25 in cash for the assets of AOL and Yahoo with Verizon holding a 10pc stake in the business that will now simply be known as Yahoo. The sale includes tech and business news sites TechCrunch, Engadget and Yahoo Finance.

The total deal of $5bn marks a significant write-down for Verizon which previously paid $4.4bn for AOL in 2015 and $4.5bn for Yahoo in 2017.

The writing was on the wall for some time as Verizon put more focus on its phone and internet business, namely in the hefty investment needed in 5G, while shifting away from its media and publishing arms.

In 2020, Verizon sold the Huffington Post to BuzzFeed and today (4 May) will see the closure of Yahoo Answers. Meanwhile in 2019 Verizon sold off blogging site Tumblr to the company behind WordPress, for a sum believed to be much lower than the $1.1bn it was once worth.

The latest sale is a notable one as Verizon now differs from its competitors in Comcast and AT&T, which all have media interests in streaming and broadcasting.

Verizon’s ownership of Yahoo and AOL had been tumultuous with a lot of unclear messaging. The company planned to turn the two ventures into online advertising powerhouses that would wrest some ad dominance away from Facebook and Google.

Yahoo and AOL were merged into one entity called Oath before being rebranded again as Verizon Media Group. The division’s chief executive Tim Armstrong left in late 2018 and in early 2019, it laid off 800 people, around 7pc of its staff.

Armstrong’s successor Guru Gowrappan will continue to run the business now under Apollo’s ownership.

Gowrappan said Yahoo will be “well positioned to capitalise on market opportunities, media and transaction experience and continue to grow our full stack digital advertising platform” with its new owners.

Apollo Global Management has some interests in media, including Cox Media Group, but has a strong presence in the retail and hospitality industries. Earlier this year it acquired arts and crafts retailers Michaels. It has ownership stakes in airlines, hotels and casinos and last year invested in Expedia.

Verizon Media said that it reported “strong, diversified year-over-year revenue growth the past two quarters”.

“The next iteration (of Verizon Media) requires full investment and the right resources,” Verizon chief executive Hans Vestberg said. “During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media.”

The deal is expected to close in the second half of this year.

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