Struggling Verizon Media Unit Sold To Apollo For $5B
The telecom giant has offloaded the Verizon Media business unit, which includes its AOL and Yahoo assets, for $5 billion to private equity firm Apollo Global Management.
Verizon has sold its Verizon Media business unit, which includes its AOL and Yahoo assets, for $5 billion to private equity firm Apollo Global Management.
The telecom giant acquired both AOL and Yahoo in an effort to help Verizon differentiate in the telecom space with a digital media and advertising business. The two assets were rolled into a business unit that Verizon called “Oath.” In 2018, the group was rebranded as Verizon Media, but the segment still struggled to gain a foothold.
Verizon is retaining a 10 percent stake in the media business, which will be called Yahoo, according to the two companies.
The Basking Ridge, N.J.-based carrier in 2015 acquired AOL for $4.4 billion. After some bumps along the way and a security-related setback, Verizon acquired Yahoo for its sports and finance content in 2017 for $4.5 billion.
Verizon Oath CEO Tim Armstrong in 2018 revealed that he would be leaving the company. At the time, Oath’s former president and COO, Guru Gowrappan, assumed all management responsibilities as CEO of the subsidiary. Verizon Media in 2019 confirmed that it was laying off 7 percent of its workforce, which represented about 800 positions.
Verizon CEO Hans Vestberg called the growth potential for Verizon Media “enormous,” in a statement published on Monday. “The next iteration requires full investment and the right resources. During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media. I have full confidence that Yahoo will take off in its new home,” Vestberg said.
Despite the segment’s setbacks and declines in recent years, revenue for Verizon Media, climbed 10.4 percent during the carrier’s more recent fiscal quarter to $1.9 billion. The boost marked the second consecutive quarter of double-digit year over year growth for Verizon Media, which the company said was driven by an uptick in advertising revenue.
Verizon isn’t the only company that has made an effort to return to its telecom roots in recent years. Activist investor Elliott Management in 2019 set its sights on Dallas-based rival AT&T, revealing a $3.2 billion stake in the telecom giant and laid out a series of changes intended to boost AT&T’s stock price. Elliott at the time in an open letter called into question the carrier’s management team, as well as its aggressive acquisition strategy over the past several years that hadn’t added to AT&T’s core telecom business.
Verizon stock traded up slightly (.61 percent) on Monday afternoon to $58.16 after the news was announced.