Verizon to Retain Online Content Business of AOL

Recently, at a Wall Street Journal conference, Verizon Communications Inc.'s VZ Chief Financial Officer Mr. Fran Shammo confirmed that the company will retain all online content businesses of AOL Inc. AOL. Last month, Verizon had decided to acquire AOL for a consideration of $4.4 billion. The deal is expected to be sealed this summer.

However, since the announcement of the deal, rumors have been making the round that Verizon is mainly interested in the lucrative online advertisement business of AOL and will divest the company's content division. The most popular website of AOL is the Huffington Post with around 200 million audiences. Other websites include Tech Crunch, Engadget, Moviefone and MapQuest.

Verizon is currently focusing on online content delivery, mobile video and online advertising for future growth. These businesses have the potential to generate significant revenues for the company as its legacy telecom business is facing serious pricing competition. In 2014, AOL produced 80 original episodes of video content and the company has planned to step up the number to 3,600.

Over the last couple of years, Verizon has been focusing on strengthening its Internet TV and online content delivery business. In Dec 2013, the company acquired content delivery network operator EdgeCast Networks. In Jan 2014, the company took over Intel Inc.'s INTC OnCue service and set-top box business.

Acquisition of AOL will not only expand Verizon's mobile-video offerings, but will also provide an access to its state-of-the-art advertising technology which enables  automated buying and selling of ads online. At present, AOL is developing an innovative automated technology that will enable advertisers find video publishers who will help them reach targeted audience.

Further, in Apr 2015, AOL had launched a fresh ad platform named One. This platform allows advertisers to bid for space on social networking sites such as Facebook and Twitter on the Internet. This platform tracks ads and helps advertisers purchase ad time. Data from Verizon will help AOL improve on the targeted ad front on behalf of mobile and desktop website publishers.

According to market research company eMarketer, the global mobile ad market value is expected to reach $68.7 billion in 2015 from $43 billion in 2014. Also, by 2017, the market is likely to provide an opportunity worth $133.7 billion. Meanwhile, in 2014, Verizon had taken over the remaining 45% of Verizon Wireless from Vodafone Group Plc. VOD.

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