New York: Verizon Communications Inc. scraps its media business involving brands like Yahoo and AOL for $ 5 billion (RM21 billion), ending an expensive and unsuccessful run in the media and advertising world.
Despite spending more than a decade and billions of dollars acquiring a stable portfolio of online brands, the New York-based telecom company has struggled to advance in a highly competitive online advertising space dominated by Facebook Inc and Google and has focused its resources on developing 5G. .
After deducting $ 4.6 billion in business value in 2018, Verizon will receive just $ 4.25 billion in cash from the private equity firm Apollo Global, along with favorable benefits of $ 750 million and a 10% stake in the unit – about half of what it paid to the companies.
The move concludes with an ongoing drip of deals that saw Verizon sell its Tumblr blogging platform in 2019 for an undisclosed amount and news site HuffPost to BuzzFeed last year.
The series of media stripping came after Verizon CEO Hans Festberg took over the leadership of the wireless service provider from his predecessor Lowell MacAdam, who had been behind the vision of the media and communications giant.
Vestberg has prioritized building the telecom network as the company spent $ 52.9 billion on C-band spectrum at a government auction earlier this year.
The divested unit, formerly called Oath and recently renamed Verizon Media, will now be called Yahoo upon the closing of the deal in the second half of 2021 and continues to be managed by Guru Juraban.
For Apollo, the deal comes at a time when large internet platforms have amassed huge chunks of the digital advertising market, leading to regulatory scrutiny over their practices.
Apollo, an investor in Shutterly and Expedia Inc, was interested in Yahoo’s asset when he ran an operation in 2017.
Apollo partner Reed Rayman said the private equity firm will look to expand advertising and e-commerce and grow major assets including Yahoo Finance and Yahoo Sports through new business initiatives, such as subscriptions.
Verizon started engaging potential buyers last fall. Reuters previously reported that it sought buyers for Yahoo Finance in 2019, and some industry estimates put the business alone at around $ 2 billion. Reuters