US operator Verizon has agreed to sell its Verizon Media unit – including the AOL and Yahoo brands – to affiliates of Apollo Global Management for $5 billion.
After the transaction closes, the business will be known as Yahoo and will continue to be run by CEO Guru Gowrappan. Verizon will retain a 10 per cent stake in the business.
Since then, reports about a potential sale of the media assets have circulated frequently, as synergies with its wireless business proved hard to implement.
A sale of the assets was predicted by Lightshed Partners: in a research note issued in late 2020, analysts highlighted a “failure of Verizon’s digital media assets to create a mobile platform with robust, first-party data”, and predicted revenue from its Verizon Media unit would decline in 2021 “in stark contrast to the significant growth we are seeing in digital advertising across the major tech platforms”.
Colby Synesael, Senior Equity Research Analyst at Cowen and Company, said his team sees the transaction as “modestly positive” for Verizon because the media unit was of limited benefit to Verizon’s core wireless business and would have required significant investment to remain competitive.
This is the second time this year that a private equity company has moved on a US operator’s media assets. In February, AT&T agreed to sell 30 per cent of DirecTV to TPG Capital.Subscribe to our daily newsletter Back