Verizon Sells AOL, Yahoo, Offloading Media Business

The impending $5 billion Verizon Media sale will focus the carrier on its consumer and business units.

Verizon on Monday announced that it has agreed to sell Verizon Media to Apollo Global Management. The private equity firm is paying $4.25 billion in cash, preferred interests of $750 million. In addition, Verizon will keep a 10% stake in Verizon Media, which will operate as Yahoo following the sale. Yahoo and AOL both belonged to the media group, which Verizon previously called Oath.

Verizon Media CEO Guru Gowrappan will continue to lead Yahoo following the sale.

Diminishing Returns

The Yahoo and AOL properties that comprise the media unit have almost halved in value since Verizon purchased them. Verizon bought Yahoo for $4.83 billion in 2016 and AOL for $4.4 billion in 2015. Nevertheless, Verizon Media Group has posted year-over-year revenue growth the last two quarters. According to Verizon, Yahoo News has garnered favor from TikTokers and other Gen Z internet users. Most recently, the media unit landed $1.9 billion in revenue for the first quarter of 2001. However, $1.9 billion pales in contrast to $32.9 billion in overall revenue Verizon garnered in the first quarter.

Verizon’s Hans Vestberg

“Verizon Media has done an incredible job turning the business around over the past two-and-a-half years and the growth potential is enormous,” Verizon CEO Hans Vestberg said. “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.”

The deal marks a stark shift in the telecommunications market, which has seen telcos and cablecos buy content providers. For example, AT&T in 2018 acquired Time Warner, obtaining ownership of media brands like HBO and CNN. But Verizon, whose Yahoo and AOL acquisitions came before the AT&T-Time Warner deal, seems to have waved the white flag on media.

Verizon in 2018 restructured into three units: media, business and consumer. We spoke to Verizon channel chief Wendy Taccetta last month about the efforts the carrier is making to improve partner experience. Taccetta touched on how the restructuring gave channel executives an opportunity to unify the partner program.

Apollo recently sold distributor Tech Data to Synnex for billions of dollars.