New York News Steve Case Washington DC

Can You Hear Me Now? AOL Says Yes

It’s a bitter sweet day for those people working at the Huffington Post, TechCrunch, Engadget and their affiliated media brands. All three consumer lifestyle and tech focused brands have often times been critical of Verizon Wireless and the moves the telecommunications giant has done to get the biggest slice of the wireless pie.  Although working for a big corporation, all three blogging giants were given (to a degree) editorial freedom to operate separately than the rest of the AOL company, or at least thats what were led to believe. Well the world’s been upside down as it was announced before the bell this morning,  that the entire AOL company, once valued at over $222 billion dollars, was being purchased outright by Verizon for a measly $4.4 billion dollars, or a premium of $50 per share.

The sale of AOL to Verizon was approved by AOL’s shareholders over the weekend as a full cash sale, well at least mostly cash and corporate paper. There’s no trades for AOL stock for Verizon stock. AOL shareholders will receive cash.

Although the $4.4 billion dollar figure is much lower than what AOL was once valued at, current AOL CEO Tim Armstrong has done a great job of making the digital media and content strategy work. AOL went into an acquisition mode acquiring Huffington Post, TechCrunch and Engadget earlier this decade, in independent deals valuing over $350 million dollars. Since then AOL and their advertising subsidiaries have been able to steadily monetize all of their media brands, except their Patch network which for the most part has been laid to rest.  Collectively it’s reported that the AOL media brands bring in $600 million in advertising revenue.

While the company’s internet service provider business is for the most part, just a memory from their Washington DC area campus, the company still has over 2.1 million dial up customers, mostly in rural areas.

Analysts are calling this acquisition a huge win for both sides as AOL clearly needed a mobile strategy while Verizon was cautiously looking for other revenue streams including media, and content development and the advertising revenue that comes along for the ride.

Armstrong’s personal stake in AOL is now worth $83 million dollars based on news of the acquisition. It’s been reported that no layoffs are expected. AOL will continue to produce great content that we’re confident will come to Verizon Wireless users as an exclusive in one shape or another.

The deal is expected to close in the middle of the summer with very few regulatory hurdles.