Verizon Officially Acquires AOL in Major Media Consolidation Deal

According to a press release from Verizon Communications Inc. VZ, the company has officially and successfully acquired AOL Inc. AOL by purchasing all outstanding shares for $50 per share in cash. The deal in total is worth around $4.4 billion, and with the deal, AOL, now a wholly owned subsidiary of Verizon, will no longer have its shares traded on the NYSE.
          
AOL CEO Tim Armstrong will continue to lead his company's operations, with Verizon's president of its Digital Media Services department Bob Toohey reporting to him, according to the release. AOL's high-profile content brands of TechCrunch, Engadget, and the Huffington Post will remain with AOL as well for the time being.

Why the purchase?
           
The deal gives Verizon a chance to tap into the mobile video market, which is increasingly used by consumers and is coveted by advertisers. Another reason for the acquisition is the fact that Verizon's rivals are trying to tap into the space as well, with Comcast Corp. CMCSA purchasing NBCUniversal in 2011, along with AT&T T currently working to acquire DirecTV DTV.
           
AOL trails only Google GOOGL and Facebook FB in the number of viewers of its videos online, and is also the number 4 producer of online video ads. AOL's advertising technology platforms grew 21% in the first quarter compared to the year prior's first quarter, and it made up 45% of its corporate revenue.
           
Verizon said back in March that it would be rolling out a video streaming app that may be supported by ads instead of subscription, which will be much easier to create and grow with the acquisition of AOL.

As mobile providers deal with the market for mobile phone subscriptions being saturated, they are looking for other ways to generate revenue growth, and the growing video streaming market seems to be where they are looking. It will be interesting to see exactly how Verizon uses its new acquisition to their advantage, and how their revenue streams will grow and change moving forward.

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