American mobile giant Verizon Communications Inc. had decided to buy AOL Inc. for $4.4 billion. After the acquisition, AOL will be included as a separate division in Verizon. The transaction is however expected to be completed by summers this year. This merger of a leading content producer and a mobile network provider may create a major new player in the digital media business. Also, CEO AOL Inc. Tim Armstrong will continue to lead the company.
Armstrong said in an interview, “We are excited to work with the team at Verizon to create the next generation of media through mobile and video”.
Talking about the acquisition, Verizon said, “Significant step in building digital and video platforms to drive future growth.”
AOL currently is providing online content, advertisements and video services to more than 40,000 publishers. The deal will include all its key assets like Huffington Post, Techcrunch, Engadget, Makers.
Verizon since long has a plan to dominate the media business where all content from TV channels and publication will be streamed over the web. Basically the company wants to be a one-stop shop from entertainment and various internet service.
Company also has some quick plans to launch a video service for mobile devices in near future which will be a mix of ad-supported, free and paid content.
John Stratton Verizon’s president of operations gave a statement at a Jefferies investor conference early Tuesday saying, “Certainly the subscription business and the content businesses are very noteworthy. For us, the principal interest was around the ad tech platform”.
Verizon has attained a significant growth in last few years and so has the growth avenue of the company. Stats state that the mobile giant of the United States brought in $127 billion revenue last year. Verizon currently operates in 150 countries and has 6.7 million Internet subscribers, 5.7 million FiOS video subscribers and 108.6 million wireless customers. Verizon is offering $50 a share of AOL whereas its closing price on Monday was $42.59. The transaction is subject to customary regulatory approvals and closing conditions says Verizon.