Verizon’s shock announcement that it plans to acquire AOL for $4.4 billion generated more questions than answers–most importantly and bafflingly, Why?
If the sale is approved by regulators, America’s largest provider of wireless access will take control of the former Internet darling’s confederation of content sites such as AOL.com, the Huffington Post and TechCrunch, as well as the company’s online video-advertising business (not to mention a still sizable dial-up web-access operation). Telecom giants like Verizon have found their once comfortable positions assailed as technology giants increasingly tread on their turf. Competitor AT&T is nearing a $49 billion deal for DirecTV that would make it the country’s biggest pay-TV distributor. Verizon is hoping AOL can help it take on firms like Google and Facebook in the fast-growing online video-ad market.
For AOL, the sale is the latest chapter in a long, oft-tortured history. The dial-up pioneer grew to more than 20 million subscribers before completing a $183 billion merger with Time Warner at the height of the dotcom bubble. The marriage soured, and Time Warner ultimately spun out AOL six years ago.
Under CEO Tim Armstrong, a former Google executive who will stay on after the merger, AOL invested heavily in technology that allows advertisers to automatically bid for online ads. The company best known for the tiny “You’ve got mail” emanating from lo-fi computer speakers will now disappear into another corporate giant. This time there will be considerably less fanfare.
–MATT VELLA
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