Yahoo, AOL sold to private equity firm
Yahoo and AOL, kings of the early internet, saw their fortunes decline as Silicon Valley raced ahead to create new digital platforms. Google replaced Yahoo. AOL was supplanted by cable giants.
Now they will become the property of private equity. Verizon, their current owner, agreed to sell them to Apollo Global Management in a deal worth $5 billion, the companies announced Monday.
The business housing the two brands, Verizon Media, is to be renamed (yet again) to Yahoo (sans the brand’s stylized exclamation point), and the sale will also include its advertising technology business. Verizon will retain a 10 percent stake in the newly formed media group, the company said in a statement.
Guru Gowrappan, the head of Verizon’s media business, who will continue to lead the new Yahoo, was optimistic in a note to employees Monday morning. “This next evolution of Yahoo will be the most thrilling yet,” he said in the memo, which was obtained by The New York Times.
He added that Apollo would allow the business to grow, a more difficult prospect when it was operating within Verizon, which was planning to spend even more money to expand its next-generation 5G wireless network.
“Yahoo will now have the investment and resources needed to elevate our business to the next level,” Gowrappan said, suggesting that the company will be able to develop new sources of income such as subscriptions and e-commerce. The company does not plan any layoffs for now.
The deal signals an unraveling of a strategy Verizon heralded in 2015 and is the latest turn in the winding history of two of the web’s pioneers.
Yahoo used to be the front page of the internet, cataloging the furious pace of new websites that sprang up in the late 1990s. AOL was once the service that millions of people used to get online.
But both were ultimately supplanted by nimbler startups. Google and Facebook became the dominant forces of the web, and Yahoo and AOL became giant publishers instead. Yahoo Sports is a popular destination with sports fans, and Yahoo Finance is a wealth of information for retail traders. AOL acquired a raft of early media brands, including the Huffington Post (now HuffPost), TechCrunch and Engadget, and several digital ad-tech companies to create a giant platform for advertising.
When Verizon bought AOL in 2015 for $4.4 billion, the company called AOL “a digital trailblazer.” Lowell C. McAdam, Verizon’s chief executive at the time, championed the deal as part of its “strategy to provide a crossscreen connection for consumers, creators and advertisers to deliver that premium experience.”
Tim Armstrong, the head of AOL, was part of the package, and he soon persuaded Verizon’s executives to add to its media holdings. Armstrong orchestrated the 2017 purchase of Yahoo for $4.5 billion — a prize he had been pursuing for years.
In the statement announcing the deal at the time, Armstrong said, “We’re building the future of brands.”
Apollo has been on a buying spree in the past few months, announcing deals to acquire Michaels, the chain of crafting stores, and the Venetian Resort in Las Vegas.