Verizon confirmed earlier this week that its Verizon Media division would be sold to Apollo Global Management, only four years after it was founded. The subsidiary includes brands like AOL and Yahoo with all its various offerings.
Verizon will retain a 10% stake in the company, but at the cost of $5 billion for the transaction, it’s a fraction of the original purchase price. Verizon acquired AOL in 2015 for $4.4 billion and a year later made a $4.48 billion offer for Yahoo’s core internet business. Tap or click to see what Gmail, Yahoo and Outlook get for providing you a free email account.
When the deal is completed later this year, Apollo Global Management will rename the former Verizon Media to Yahoo. But what does this mean for AOL and Yahoo customers?
Yahoo is the golden goose
As with most mergers and acquisitions, the purchasing company is playing its cards very close to its chest. Apollo Global Management hasn’t revealed what the long-term plans are for the different departments within Verizon Media.
In a statement, the company did elude to plans to grow each of the departments at first and not looking to sell off any assets immediately. “We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth,” said David Sambur, Senior Partner and Co-Head of Private Equity at Apollo.
The renamed Yahoo business division includes Yahoo Mail, Mobile, Finance, News, Sports and Fantasy. Since the services are only changing owners, there shouldn’t be any major disruptions to the email service.
With that said, very little is known about Apollo’s infrastructure, online security strength or server capabilities. It wasn’t revealed in the deal if Apollo will also acquire the infrastructure that keeps Yahoo mail running.
AOL’s fading popularity
The once-great AOL might be a different story. In its hey-day, AOL was one of the biggest internet companies with millions of users. Today the business mainly sells technical support and online security packages.
According to estimates, the monthly subscription service called AOL Advantage has just under 2 million customers. It nets the business around $180 million in annual revenue. In the long run, Apollo could retain the AOL Advantage division and release any other assets.
Unbelievably, AOL still has several customers who connect to the internet through dial-up modems. Six years ago, the number was as high as 2.1 million. But a company insider revealed that has now dwindled to only a few thousand.
Apollo probably doesn’t have the appetite to service only a few thousand customers with archaic technology. A possible solution is to provide free fiber upgrades on Cox Communications as it has a controlling stake in Cox Media Group.