Verizon to Buy AOL for $4.4B

[WDCDev]

To give you some perspective.

When Time Warner and AOL merged back in 1999, AOL was valued at $166 Billion.

[ra1n85]

Recently, a woman that I shared an elevator with commented on my laptop - she noticed that I worked at a large tech company. She commented that she too had worked for a large tech company at one time - AOL. I smiled.

She then immediately recounted the day she and her entire floor were laid off unceremoniously. Luckily, that was about the time that we reached her floor.

[tootie]

AOL might be the ultimate company that missed the boat. They practically owned the internet in America in the 90s and just let the whole thing get away. They had pole position to be Google+Facebook at once.

[ghshephard]

And one of AOL's acquisitions, Netscape, was worth $10B when the deal closed in 1999.

[cmurf]

No that's backwards. AOL bought Time Warner for $165B. Their valuations relative to each other was 55/45, so actually AOL was valued at more than $165B. But yes in any case, AOL was worth quite a bit more in 2000 than 2015.

[aylons]

At first, I read the deadline as $4,48, mistaking the B for an 8. That I didn't got think twice to interpret this way reveals how far down AOL went, at least in my opinion of it.

[consptheorist]

and with factoring the effect of inflation in the equation, the picture looks way worse and bleak!

[mathattack]

And much of the current value is from acquisitions made since then.

[CyberDildonics]

Adjusted for inflation that should be well beyond the GDP of New Zealand.

[etr71115]

$228 billion in 2015 $

[randomname2]

AOL in a big media deal, Clinton running for office, stocks at all time highs. What's not to love about 2000.

[uptown]

Plagiarism still going strong too!

https://twitter.com/ollieblog/status/598087576675844096

[bengarvey]

Which Clinton was running in 2000?

[lbradstreet]

I guess you mean Hillary for the Senate

[infinite8s]

"It's different this time..."

[Tloewald]

Clinton and Bush.

[tat45]

You win the internet for today.

[lxchase]

While many are seeing this as bizarre, it is not. This is a programmatic and verticalization play. Verizon has been investing in adtech companies and provides the means of distribution. The deal allows them to now own the content as well. As someone in the advertising agency, Verizon has been one of the few telecoms that have enabled advertisers to utilize their data. This deal furthers their ability to tie mobile data with content for targeting and reporting purposes. You also have to remember Verizon is a TV content distributor that may pave way to AOL content distribution and allow true ROI measurement on Linear TV.

[huskyr]

For those who are wondering why this might be a good investment: AOL still has 2 million (!) dialup subscribers that fork over $20 a month.

http://qz.com/401567/more-than-2-million-american-homes-are-...

[basch]

I doubt it was for the subscribers. Look at AOL's recent acquisitions in the last 10 years.

Video: StudioNow, 5Min Media, GoViral, Vidible

News: Weblogs, TechCrunch, The Huffington Post

Marketing: Lightningcast, Third Screen Media, AdTech, Tacoda, Quigo, buy.at, Pictela, gdgt, Adap.tv, Convertro, Gravity

One by AOL sunset Gravity, Pictela, ADTECH, Adap.tv, AdLearn, and Convertro (along with subproducts like Adap.tv Marketplace, and AOL's native data platform) into one product. One by AOL is a HUGE product. http://corp.aol.com/2015/04/14/aol-launches-one-by-aol/

[jenius]

I feel like this is a perfect reason why this is a bad investment. Anyone who is still subscribed to AOL dialup is honestly probably a senior citizen or technology-illiterate. AOL is not even marketing their dialup service anymore. These people over time will slowly decline until those 2 million eventually hit zero. In fact, you can clearly see the nearly exponential downward trend right on the article you linked. This makes it a nice amount of basically free money for AOL currently, but an absolutely terrible investment for the future.

[richardwhiuk]

At a cost of $2000 a sub, that's pretty expensive though.

[serve_yay]

They do have that, but I suspect this has more to do with ads than those customers. If it was about those customers, Verizon would be paying quite a lot for them.

[darkstar999]

But they definitely aren't being acquired for that reason.

[bane]

Their respective headquarters are also right down the road from each other.

[jmhuret]

$4.4 Billion is the equivalent of 7.3 Trillion free hours of AOL service via promotional cd-rom.

[temuze]

Assuming you get 1000 hours per CD, you're saying CDs cost about $1.65.

You could probably get CDs in bulk for an order of magnitude or two cheaper. Assuming the CDs are $0.01, that's 440 trillion free hours. Great deal for Verizon.

[r721]

Unpaywalled: https://archive.is/kVlwE

[mooredinty]

For the past couple of years, AOL has been a place where companies go to die. Will Verizon pick up that mantel and continue offering the much needed "Death with Dignity" service for waning tech companies?

[jasonlbaptiste]

Not true at all - HuffPo has grown, Adapt.tv is a big win, 5Min was the foundation for video (they're top 3 now), Weblogs Inc setup content division, etc. I'm sure there are some bad deals done, but they've had a great track record on buying+integrating.

[itsbits]

I am working in AdapTV. With AOL, we didn't die but surely didn't improve...

[smrtinsert]

Like Techcrunch or Huffington Post?

[hackuser]

Is Verizon competing with Comcast, who bought its own media company (NBC Universal)? Are the big communications companies now competing over vertical integration?

If they invest in vertical integration, that might give them a strong incentive to maximize their investments by priortizing their own media over others, degrading the open Internet.

[snowwrestler]

The answers are yes, yes, and yes.

As content becomes unbundled from the wire, wire-owning companies need to become content companies if they want to avoid becoming a utility.

[darklajid]

Today I learned that WhatsApp is 5 times more valuable than AOL - and I never understood either of these companies' market..

Interesting though - that company 'felt' like a giant when I seriously got into using the web and although the article seems to imply that the operations of AOL continue (using the AOL brand?) it's fascinating to see such a company being swallowed.

[aylons]

Sorry, but why do you believe WhatsApp is overvalued? They have an incredible mindshare, it is the only app (besides Facebook), that I see moms and grandmas using on a daily basis.

Heck, my mom talk to me mostly through it. She evens send me emoticons, pictures and voice notes!

[aioprisan]

The internal memo: http://techcrunch.com/2015/05/12/verizon-aol-4-4b/

[Dirlewanger]

Time to discard every media entity under AOL. You can be damned sure Verizon will be tightening up how wild they get on certain issues e.g. Net Neutrality and anything else that can affect their bottom lines.

[baldfat]

Huffington Post, TechCrunch and Engadget how do these fit? Does this mean these might go away??????

Can one be so lucky?

[nashashmi]

I am having an epiphany. AOL, an internet provider and ad company, buys Time Warner. AOL gets spun off into an independent company. AOL reinvents itself as a media and ad company. Verizon, an internet and TV provider, buys AOL.

This is happening after Verizon reinvented itself from a phone company. Merger 2.0 is making more sense than it was the first time, but still, nonsense enough.

[kreilly]

This is not about dial-up or media. This is about ad tech. Aol is done a very nice job of acquiring sold assets in this space. I think this is a smart move.

[acomjean]

I used to use AOL. Before broadband to the home, AOL had lots of modems and local access numbers. I traveled a fair bit and that was really useful, for my monthly alotment of 3 hours.... This was a while ago (AOL was giving away floppy disk before CDs.)

It was a walled garden, and since most people were on AOL, besides email there wasn't much outside communicating. Frankly at the time there wasn't nearly as much on the web. When AOL unleashed their users on the web it was a big deal.

AOL really got killed by broadband to the home, which they couldn't offer.

I hope that this doesn't turn into a onerous add push at Fios and DSL users. Verizon does some strange things like redirecting missed DNS hits to an ad page.

[yla92]

Official announcement : http://www.verizon.com/about/news/verizon-acquire-aol

[tat45]

Another former AOLer here. They tried to make a run at the broadband market in the early aughts by partnering with various telcos (I know; I was part of the team that built the back-end interface with the ISPs), but it was too little, too late. I never understood how AOL thought that would be sustainable in the long term.

A few months after I left the entire billing department saw deep cuts after AOL nixed their monthly subscription fees for dial-up.

[yuhong]

Makes me wonder what would have happened if this acquisition was done a decade ago.

[brayton]

Surprised we aren't seeing the Gov jump in with Antitrust laws. Verizon can't have 4G AND dialup! Just not fair

[tomswartz07]

This might be a good investment: AOL still has over 2 million dialup subscribers.

It's not unreasonable for a company that 'owns' the copper going to homes to also manage the dialup internet connections there as well.

[Aqwis]

Is AOL still an Internet access provider?

[acjohnson55]

Yes, there's a shrinking, but still very lucrative, dialup business. It's provided the capital for Aol's growth into media and advertising these past several years.