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Verizon Buys AOL for $4.4 Billion

Verizon today completed its courtship of AOL with a $4.4 billion marriage of the leading wireless provider and the pioneering, but ailing, digital media company. In announcing the historic deal, Verizon EVP and president of new business Marni Walden declared that the new entity “will be directly targeted at the global advertising industry.”

AOL henceforth becomes a wholly owned subsidiary of Verizon and its shares will no longer be traded on the NYSE.

AOL CEO Tim Armstrong (above) said that he expected the deal to ultimately be worth $80-$100 billion in added business to his company. “We believe [mobile] will represent 80% of consumer media attention,” said Armstrong, who lauded Verizon as a “pioneer in mobile and media acquisition.”

  • Under Verizon’s aegis, AOL claims it will operate at the scale of Facebook and Google, touching 70% of Internet traffic in the US and reaching across 1.5 billion PCs, TVs, and mobile devices globally.
  • AOL will operate independently and Verizon will contribute its Digital Media Services (DMS) division to the new entity. DMS President Bob Toohey will report to Armstrong, and Armstrong will report to Walden.
  • With the deal closed, Verizon said it expects 90% of its traffic to be content in the next five years, as opposed to only 60% currently.

Walden said Verizon expected to launch an expanded content business this summer that will stream fresh titles and live sports and music events. “We will have one of the largest marketplaces for live video,” she said.

Armstrong apparently sees the deal as salvation for his troubled company. “Our goals as a combined entity are becoming the number one global media company. Nobody owns the future, and getting the two companies together allows us to have a bigger seat at the table,” he said.

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