Verizon Acquires AOL For $4.4 Billion

May 12, 2015
Originally published on May 12, 2015 10:11 am
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RENEE MONTAGNE, HOST:

In the world of technology, there's another big merger announced this morning. Verizon says it will acquire AOL for 4.4 billion dollars. Verizon says the move is aimed at strengthening its growing mobile video business. NPR's Jim Zarroli joins us now to talk more about this. Good morning.

JIM ZARROLI, BYLINE: Good morning.

MONTAGNE: Start by telling us, if you will, a little bit about what Verizon hopes to gain from this deal.

ZARROLI: Well, Verizon is of course a giant telecommunications company, big wireless company. It made $12 billion in profits last year. It also sells, you know, high-speed Internet services to consumers and businesses, but that is kind of a mature business. It's not likely to grow as much. So Verizon thinks the future lies in mobile video, in other words, just watching video on your cell phone or your mobile device. It's a way to attract younger consumers in particular. A lot of companies are trying to enter this field. Verizon introduced a video service recently that allows it to offer shorter videos, and it can also offer some live programming, you know, but it is a very competitive field right now.

MONTAGNE: And where exactly does AOL fit into that strategy?

ZARROLI: Well, you may remember AOL as, you know, the big dial-up company at the very beginning of the Internet age. You know, you've got mail became kind of a catchphrase.

MONTAGNE: Right.

ZARROLI: It was so big and so important it actually merged with Time Warner in a deal that proved to be pretty much a disaster. AOL was eventually surpassed by other big tech companies, but it didn't go away and it's been redefining itself. Today, AOL is basically two things. It owns content sites, and the best one is - known is probably Huffington Post, but it's also had some success in creating technology platforms for advertisers. It creates these platforms that web producers can use to sell advertising, target different consumers. It's a field that a lot of different companies want to go into. AOL has become sort of one of the leaders, and that seems to be what Verizon is primarily interested in.

MONTAGNE: So this is interesting. Does that mean that AOL is on its way up again as a player in the tech sector?

ZARROLI: Well, the 2001 deal with Time Warner was worth $165 billion. This one is worth, you know, 4 or 5 billion, so it's got some growing to do to get back to where it was.

MONTAGNE: All right. Well, thank you very much. That's NPR's Jim Zarroli.

ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.