US comms giant Verizon has announced the sale of its Verizon Media division to funds managed by affiliates of Apollo Global Management.
The $5bn deal will see the global alternative investment management firm pick up assets covering a number of brands such as Yahoo and AOL, as well as advertising technology and media platform businesses.
For its past two quarters, Verizon Media has reported strong, diversified year-on-year revenue growth, driven by ad offerings, consumer e-commerce, subscriptions, betting and strategic partnerships, said Verizon. Yahoo, still one of the best recognised digital media brands in the world and the fourth most visited internet property globally, is said to have become the fastest-growing news organisation on TikTok.
The sale is intended to accelerate growth of the internet and digital media firm and, under the terms of the agreement with Apollo, Verizon will receive $4.25bn in cash, preferred interests of $750m and will retain a 10% stake in Verizon Media. The transaction is subject to a number of closing conditions and is expected to close in the second half of 2021, with the new business rebranded as Yahoo.
The new organisation will continue to be led by CEO Guru Gowrappan, who said: “The past two quarters of double-digit growth have demonstrated our ability to transform our media ecosystem. With Apollo’s sector expertise and strategic insight, Yahoo will be well positioned to capitalise on market opportunities, media and transaction experience and continue to grow our full stack digital advertising platform. This transition will help to accelerate our growth for the long-term success of the company.”
David Sambur, senior partner and co-head of private equity at Apollo, added: “We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth in digital media, advertising technology and consumer internet platforms. Apollo has a long track record of investing in technology and media companies, and we look forward to drawing on that experience to help Yahoo continue to thrive.”
Assessing the deal, Jim Nail, principal analyst at Forrester, said the news that Verizon was backing off its foray into media and advertising technology and retrenching to its core competence as a mobile telco should come as no surprise. “When Verizon acquired AOL in 2015 and then Yahoo in 2017 for approximately $9bn combined, the industry reaction was mixed, and rightly so,” he said.
“When the nosedive [in media] came in 2018, Verizon insisted its media business would come back stronger than ever. Apparently not. The media business is competitive; AOL and Yahoo are not ‘premium media assets’, certainly not in the modern sense. They are not titans of original programming like Amazon Prime or Hulu.
“Google, Facebook and now Amazon are digital advertising freight trains. They just keeping taking the lion’s share of digital ad spend in spite of much wishful thinking to the contrary. Telcos don’t make great media companies. Rumours have been circulating for months that AT&T was planning to divest itself of its media business. So if AT&T can’t make a real go of it, which telco can?”