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Verizon Closes AOL, Hints at Summer Launch

Mari Silbey
6/23/2015

It's a small, small digital world.

Completing a story that began with Internet domination in the 1990s, AOL Inc. (NYSE: AOL) officially became a wholly owned subsidiary of Verizon Communications Inc. (NYSE: VZ) Tuesday in the close of a deal worth approximately $4.4 billion. AOL CEO Tim Armstrong will continue to lead the AOL business, now reporting up to Marni Walden, Verizon EVP and president of Product Innovation and New Businesses. Bob Toohey, president of Verizon Digital Media Services, will report directly to Armstrong.

On a press call to discuss the acquisition, both Walden and Armstrong emphasized Verizon's goal to become the leading media technology company in the world, with Walden noting that the deal is about "driving value above our access network" and creating "a new revenue stream above the network." Those words echo the sentiments of Verizon CEO Lowell McAdam earlier this year, who said of the AOL purchase that it will provide "customers with a premium digital experience based on a global multiscreen network platform." (See Verizon's $4.4B AOL Buy a Digital Media Play.)

Walden also stated that "AOL's advertising platform is an exceptional fit," suggesting that ad-related revenues will be a large part of Verizon's media future.

For Armstrong's part, the AOL leader was equally enthusiastic about joining forces with Verizon. Armstrong said he believes the combination of the two companies "will give us a big seat at a big table in the future."


For more on operators digital media strategies, visit the dedicated video services content section here on Light Reading.


Without going into too much detail, Walden also shared some new information about Verizon's planned launch of a mobile-first video product later this summer.

"Today we are securing content from live content, emerging content [and] on-demand content, and we're planning on having a number of fresh titles in the product," said Walden. She explained that the new Verizon video service will work over any network, but "will work best over Verizon's network," and that some capabilities, like video delivered over Verizon's LTE Broadcast platform, will only be available for Verizon customers. (See Verizon Scores New OTT Content Deals and LTE Upgrades Support Verizon's AOL Move.)

Walden said there are no immediate plans to offer a global video service, but acknowledged that AOL gives Verizon better capability to expand around the world in the future.

In one final note, Walden also clarified that "ad-sponsored data is part of the product offering." That statement refers to the concept of having sponsors pay for mobile delivery so that certain content doesn't eat into customers' capped mobile data plans. The idea is raising some net neutrality hackles, but Walden said Verizon believes it is well within its rights to deliver such a service to advertisers and consumers.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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wanlord
wanlord
7/7/2015 | 2:02:30 PM
Re: Verizon Closes AOL
I am really surprised they are keeping him. So much baggage and risk with that guy. I can hear the HR Paddy Wagon warming up...
wanlord
wanlord
7/7/2015 | 1:59:50 PM
Shingy
Any Shingy sightings at the Ridge?

 

 
mhhf1ve
mhhf1ve
6/24/2015 | 2:51:54 PM
Are there creative ways around the net neutrality problems?
I assume ads that don't count against your capped data is kosher under net neutrality rules, but if it isn't... Aren't there some creative ways to do the same thing? Instead of saying ads (or certain music services or etc) don't count against your data cap, an ISP could say that using certin services or watching certain ads can give you bonus data on top of your cap. 

 
mendyk
mendyk
6/24/2015 | 2:38:17 PM
Re: Verizon Closes AOL
Good one! They have to at least let enough time pass for Armstrong to get hit with a harassment suit from a Verizon employee.
James_B_Crawshaw
James_B_Crawshaw
6/24/2015 | 1:00:49 PM
Verizon Closes AOL
When I saw that headline I thought "Gosh, that is sooner than I expected!". I would give them a couple of years before they close it down. 
mendyk
mendyk
6/23/2015 | 5:41:11 PM
Your ad here
Having a frontline ad serving platform is nice, but it's probably the easy part. The much harder part is coming up with the content that people will want to engage with.
steve q
steve q
6/23/2015 | 5:26:49 PM
Re: Deja vu
How this help verizon when they have more customers crying for there fios service. The point of this AOL is geared to the mobile side, but the cost for the customer is more then that of fios, which gives the customer more services and faster data capacity.
brooks7
brooks7
6/23/2015 | 4:45:11 PM
Re: Deja vu
No actually the length of term of the ROI is based on the investment strategy.  The problem is that most people invest in mutual funds and are therefore indirect owners.  The mutual funds are looking to deliver ongoing returns.  That means that stocks that have short term problems create negative returns for mutual funds who tend to abaandon them.  Which is the consequence of investing in mutual funds.

seven

Edit:  And the technology nor the business are important from a return standpoint.
KBode
KBode
6/23/2015 | 2:37:23 PM
Re: Deja vu
"The owners care about a return on investment."

Correction: a short term return on investment that may or may not be good for the long-term health of the company itself. You're right of course in that they're owners, but that doesn't mean they're actually looking out for the company like an actual property owner would.

That's also before noting that many, many investors are utterly cluless about the technology they're investing in.
brooks7
brooks7
6/23/2015 | 1:49:46 PM
Re: Deja vu
Kb,

One thing you need to change is the word investors.  Replace it with the word OWNERS.  Let us recall, they OWN Verizon.  The CEO, like any other employee (say a janitor), work for the owners.  The owners care about a return on investment.  The job of management is to give the BoD as representatives of the owners a plan to maximize their return.  If management does not do that, they should be terminated.  

seven

 
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