By Micah Maidenberg
Apollo Global Management Inc. agreed to pay about $5 billion to acquire Yahoo and AOL from Verizon Communications Inc. as the wireless giant exits its ill-fated foray into the media business.
The private-equity firm is paying $4.25 billion in cash for a majority stake in the media assets and providing Verizon with interests in the businesses totaling $750 million. In addition, Verizon will keep a 10% stake in a new company, called Yahoo, that will be formed to operate the business.
The Wall Street Journal earlier reported Apollo's interest in Verizon Media's business, which mostly struggled to grow against Alphabet Inc.'s Google and Facebook Inc. Verizon Media had about $7 billion in revenue last year.
Other suitors previously showed interest in buying off certain pieces of the media unit, which includes websites such as TechCrunch and Yahoo Finance, but weren't willing to make an offer for the whole portfolio, according to a person familiar with the matter.
Verizon collected some of the web's best-known brands starting in 2015 with its purchase of AOL, followed by its 2017 acquisition of Yahoo. AOL's then-chief, Tim Armstrong, called the new business a super channel for advertisers to reach hundreds of millions of users.
Executives framed the newly named Oath business as an alternative way for marketers to reach potential customers outside of a digital ecosystem dominated by Google, Facebook Inc. and Amazon.com Inc. But the stitched-together media group couldn't keep up with its technology rivals' explosive sales growth, and Verizon in 2018 wrote down about half of the value of the media brands it had acquired.
In 2018, Verizon named Hans Vestberg CEO, picking a telecom-industry veteran with a penchant for sketching out engineering concepts on whiteboards for its top job. The Swedish transplant has spent little time discussing media and has more often touted the cellphone carrier's plan to boost revenue through the construction of a next-generation wireless network. Verizon has been shrinking the media unit, cutting jobs and selling off its Tumblr blogging platform and HuffPost news operation.
Guru Gowrappan, the current head of Verizon Media and a former Yahoo executive, will continue to run the business after the deal. The companies said the business reaches nearly 900 million monthly active users world-wide. The partners expect the transaction to close in the second half of the year.
Other telecom companies are likewise reassessing their priorities. The Journal has reported that AT&T Inc. last year began to field bids for much of the digital ad business formerly known as Xandr. The unit, which includes operations acquired from the AppNexus digital ad exchange for $1.6 billion in 2018, has also increased sales but has failed to meet executives' aggressive targets.
Ben Mullin and Miriam Gottfried contributed to this article
Write to Micah Maidenberg at email@example.com
(END) Dow Jones Newswires