Verizon said Monday that it’s clinched a deal to sell its media assets to Apollo Global Management and related entities for $5 billion. Verizon will retain a 10% stake in the company, which will be known as Yahoo at close of the transaction and continue to be led by CEO Guru Gowrappan.
Verizon Media brands are led by Yahoo and AOL, two companies with a complex and difficult past.
Yahoo was founded in 1994 by electrical engineering students Jerry Yang and David Filo as a website called Jerry and David’s Guide to the World Wide Web. It became a portal and grew rapidly during the 1990s, riding the Internet boom, but also the crash in 2001, and had a long succession of CEOs including Yang, former Warner Bros chairman Terry Semel, Caro Bartz, Tim Morse, Scott Thompson, Ross Levinsohn and Marissa Mayer.
AOL launched even earlier, in the late 1980s, and was for a time the most recognized brand on the web until broadband and competition emerged. An ill-fated merger with Time Warner in 2000 dragged on until 2009 when it was spun off as a stand-alone company.
Verizon said the corporate carveout will allow Verizon Media to “aggressively pursue growth areas and stands to benefit its employees, advertisers, publishing partners and nearly 900 million monthly active users worldwide.”
The WSJ first reported five days ago that Verizon was exploring a deal. It had already started to shed pieces of the business. In November of last year it sold HuffPost to BuzzFeed. In 2019, it unloaded social media site Tumblr to Automattic, the company that owns WordPress.
Verizon Media assets also also include Techcrunch, Engadget and ceative studio Ryot.
The move is the latest in a convoluted history of the two early-on-the-scene tech companies. Verizon bought the once mighty Steve Case-founded Internet pioneer AOL for $4.4 billion in 2015, and Yahoo for $4.5 billion two years later. It merged them into a new venture it called Oath and named Tim Armstrong, AOL’s then-CEO, to run it. He left in late 2018. Around then, Verizon announced a hefty $4.6 billion write-down of Oath assets, saying competitive pressures in the digital ad business had quashed the potential of the Yahoo-AOL integration. It scrapped the Oath moniker and renamed the division Verizon Media Group.
As with many players in the digital world, they had a hard time competing for online advertising dollars with Google, Facebook and now Amazon.
Hans Vestberg, Verizon CFO, acknowledged that the “the next iteration” of Verizon Media “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.”
David Sambur, senior partner and co-head of Private Equity at Apollo noted that the giant firm “has a long track record of investing in technology and media companies and we look forward to drawing on that experience to help Yahoo continue to thrive.”
Under terms of the agreement, Verizon will receive $4.25 billion in cash, preferred interests of $750 million and retain a 10% stake in Verizon Media. The transaction includes the assets of Verizon Media, including its brands and businesses. The transaction is expected to close in the second half of 2021.