US Carrier Verizon Communications Inc. (NYSE:VZ) to Acquire AOL

The US carrier company, Verizon Communications Inc. (NYSE:VZ) is soon going to acquire the TechCrunch owner, AOL, Inc. (NYSE:AOL). Verizon is buying AOL for $4.4 billion, which means at $50 per share. Verizon sent the internal memo about the deal to the acquired company making AOL the subsidiary of the Verizon Company.

This will increase the dominance of Verizon into the mobile video and content division. The carrier company has said that with this acquisition the strategy to drive its OTT (Over-The-Top Video) and LTE wireless video will get a boost. Apart from the original content that runs on various platforms such as the written word and video, mobile and desktop, some other assets from the AOI will prove to be interestingly important for Verizon.

Verizon Can Build Up Further the AOL Programs

Before the acquisition, AOL, Inc. (NYSE:AOL) was involved in building up a program-based advertising business to build up the way a company can monetize in harmony with the newer formats such as the mobile and the video. At present, this is the fastest growing AOL operations in context with the revenues and operates as a split between the AOL ads on the company’s sites and the sites of the third party. Verizon with its technical expertise and experience can pick up from here. It can build up collaborating with companies such as ESPN for developing content and increase the audiences for the properties owned by AOL.

 The other working areas of AOL that can gel with the operations of Verizon is the yet to take off dial-up business of the company which has been one of the highest revenue generators for the AOL, Inc. (NYSE:AOL). In the last quarter, this business pulled around $182.6 million for AOL. Although these figures show a 7% decline in the revenues as compared to last year, but for a business with almost no investment, its continuous run is in itself a great achievement.

For many company’s dial-up business is their main income generating source.

About the Author

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.

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