Verizon will sell its media group to private equity firm Apollo Global Management for $5 billion, the companies announced Monday. The sale allows Verizon to offload properties from the former internet empires of AOL and Yahoo.
Verizon will keep a 10% stake in the company and it will be rebranded to just Yahoo.
The sale will see online media brands under the former Yahoo and AOL umbrellas like TechCrunch, Yahoo Finance and Engadget go to Apollo at much lower valuations than they commanded just a few years ago. Verizon bought AOL for $4.4 billion in 2015 and Yahoo two years later for $4.5 billion.
Verizon will get $4.25 billion in cash from the sale along with its 10% stake in the company. Verizon and Apollo said they expect the transaction to close in the second half of 2021.
There has been increasing evidence recently that Verizon wanted to sell off its media properties and instead focus on its wireless networks and other internet provider businesses. Last year, Verizon sold HuffPost to BuzzFeed. It also recently sold off or shut down other media properties like Tumblr and Yahoo Answers.
Before that, Verizon’s original vision was to turn Yahoo and AOL properties into online media behemoths that could take on Google and Facebook‘s dominance in online advertising. Under former AOL CEO Tim Armstrong, the Yahoo and AOL brands were converged into a new online media division within Verizon called Oath.
But the Oath project largely failed to gain momentum, and Armstrong left the company in 2018. Oath rebranded again as Verizon Media Group in November 2018 and was run by Guru Gowrappan. Gowrappan will continue to lead Yahoo under Apollo.
With the sale of Yahoo and AOL, Verizon signaled it is no longer interested in media, unlike its rivals. AT&T is still trying to grow WarnerMedia into a streaming competitor to Netflix and Disney, even as it struggles with loads of debt from its media acquisitions. Comcast, another internet provider, is still in the media business as well with NBCUniversal.
Verizon Media’s sale to Apollo marks the latest turn in decades-long roller coaster ride for AOL and Yahoo, two of the most dominant forces in the early days of the consumer internet. After spinning out from Time Warner, AOL struggled under Armstrong, despite making bold bets on digital media properties like HuffPost and the network of local news sites called Patch.
Yahoo endured its own struggles over the last decade. After burning through several CEOs, Yahoo tapped Google’s Marissa Mayer to run the company. Mayer made big bets at Yahoo, including reformatting its news properties like Yahoo Finance and buying the popular blogging platform Tumblr for more than $1 billion. But Mayer’s Yahoo failed to live up to her ambitions, its valuation sank and it eventually sold to Verizon.
Under Apollo, Verizon’s former media properties will be challenged to grow and become profitable in order to attract yet another sale or exit down the road.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.
