Verizontoday reported that it has reached an agreement to sell its media properties to private equity company Apollo Global Management for $5 billion, after several days of negotiations and speculation. Apollo will pay Verizon $4.25 billion in cash, plus $750 million in preferred interests, and Verizon will hold 10% of the company.
When the deal is completed, the new business will be known simply as Yahoo, and it will be headed by current CEO Guru Gowrappan. “According to our understanding, the strategy includes exploring opportunities in content, commerce, and betting”, James Mathew, an Apollo employee said. The division’s current footprint includes internet brands, publishing and advertising.
In an internal memo to Verizon staff, Hans Vestberg wrote, “After a strategic analysis, Guru and I discussed, and believed, that the full potential of Media’s offerings has yet to be unlocked.” “Apollo has a bold vision that includes actively targeting growth areas such as commerce, content, and sports betting. One that has synergies with many of their conventional brick-and-mortar businesses, which can benefit from Media’s e-commerce platform. The fact that Apollo’s offer involves leveraging the entire Verizon Media ecosystem of adtech, partner relationships, data, insights, targeting, and reach made it so appealing.”
In a tweet, Gowrappan, CEO of Verizon Media, said, “We are excited to be joining forces with Apollo.” “Our ability to change our media environment has been demonstrated over the past two quarters of double-digit growth. Yahoo will be well placed to capitalise on business opportunities, media and transaction experience, and continue to expand our full-stack digital advertising platform with Apollo’s industry knowledge and strategic perspective. This transformation will assist us in accelerating our growth in order to ensure the company’s long-term success.”
In the same quote, Apollo’s Reed Rayman, a private equity investor, said, “We are excited to help unlock the enormous potential of Yahoo and its unparalleled portfolio of brands.” “We have immense respect and appreciation for the tremendous work and progress that the entire company has made over the last few years, and we are excited to work with Guru, his talented team, and our Verizon partners to accelerate Yahoo’s growth in the next chapter.”
Despite the fact that Verizon retains an interest, the divestment marks a formal withdrawal for the telecom behemoth from its costly attempt to own, create, and monetize content on top of its own and others’ networks.
Days, weeks, months, and possibly years of uncertainty about the future of the media industry under Verizon have come to an end with today’s announcement. The price Apollo is paying is consistent with recent reports estimating the transaction to be worth between $4 billion and $5 billion. Those sums can seem large, but they pale in comparison to what Verizon paid in 2015 and 2017 for AOL and Yahoo, respectively: $9 billion and $9 billion.
AOL and its numerous media holdings, including The Huffington Post, TechCrunch, and Engadget, were brought under the VZW umbrella in the previous contract. While the latter added the classic Yahoo search portal, as well as a slew of Yahoo services and Tumblr, the result was a strange combination of newer services, geared towards younger audiences, as well as a host of legacy internet properties and some creative efforts.
