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Tim Armstrong will stay with the company, but the fate of AOL's other properties remains unclear
Well, that was kind of fast, wasn't it? I expected he deal for Verizon to buy AOL, which was first announced in mid-May, to take a while to finalize, at least until later this summer. I mean, don't deals of this size usually take months of regulatory approval?
I guess not, as Verizon has now completed the deal as it was originally planned: buying all outstanding shares of AOL for $50 a share, or a total of for $4.4 billion, it was revealed in a press release on Tuesday.
During the original announcement, both companies had said that, following the completion of the merger, AOL would become a wholly owned subsidiary of Verizon, and Tim Armstrong, currently chairman and CEO of AOL, would continue in his current role, running the company.
That part of the deal has also been kept in place, and now we know a little more about how things will be run: Bob Toohey, president of Verizon Digital Media Services, will be reporting to Armstrong, while Armstrong will report to Marni Walden, Verizon executive vice president and president of Product Innovation and New Businesses.
The purchase is widely seen as a way for Verizon to get its hands on AOL's video and advertising platform, which the company has built up in the years since its disastrous merger with Time Warner ended. The acquisition will help Verizon to bolster its wireless video and and OTT (over-the-top video) strategies. Those platforms will also be connected to Verizon's IoT (Internet of Things) platforms.
In 2000, AOL purchased Time Warner for $164 billion in order to combine AOL's online services with Time Warner's media and cable assets, and create a media conglomerate. The two companies were never a good fit, however, and those corporate synergies never materialized. Time Warner chief Jeff Bewkes eventually called the merger, "the biggest mistake in corporate history." In 2009, the two companies broke up and went their separate ways.
In the ensuring years, AOL has shifted its focus, turning itself into a major player as a video and advertising platform. The company purchased video advertising platform Adap.tv for $405 million in 2013, which was one of AOL's largest acquisitions ever, even more than the $315 million it paid for the Huffington Post in 2011, but it paid off, leading the company to see double digit ad growth for the first time since 2008.
Now that AOL is owned by Verizon, there are some open questions, mostly having to do with the other properties it owned.
The company also owns a number of content brands, including The Huffington Post, TechCrunch and Engadget, and there has been no clear answer as to what will happen to those brands going forward. There has been speculation that, given Verizon's obvious interest in AOL's advertising and video platforms, it may sell off its other properties.
Whatever happens to the Huffington Post, though, its creator certainly isn't going anywhere: last week Arianna Huffington signed a four-year contract to remain president and editor-in-chief of the news blog.
(Image source: conorcullen.com)
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