AOL Not A 'Big Deal' For Verizon Like DIRECTV, But Still A Very Important One

It seems Today is turning out to be one of the best days in Verizon Communications Inc. VZ history. After announcing its $4.4 billion acquisition of AOL, Inc. AOL earlier in the morning, the Wall Street Journal reported a few hours ago that U.S. regulator are unlikely to block its acquisition of DIRECTV DTV.

Craig Moffett, Moffett-Nathanson analyst, was on CNBC recently to discuss why the DIRECTV deal matters more for Verizon than AOL deal and what value will AOL be providing the company.

Offering Something That Nobody Else Can

“Just AOL with Verizon is going to be something like 1 percent of the enterprise value of Verizon,” Craig Moffett said. “So, it’s a small transaction. It’s not like the DIRECTV deal, which is a big deal. But they are trying to put together a package of advertising assets and mobile assets for advertisers that I think are really differentiated.”

“So, if you are trying to reach millenials and you want to reach them on a mobile platform. Verizon will be able to offer advertisers something that other people won’t.”

Verizon: An AdTech Company

On whether Verizon really needs AOL to offer advertisers something that others can’t, Moffett said, “Remember what AOL is, AOL is not a dial up company anymore, it’s not a media company anymore. It’s really an AdTech company now and so what Verizon is getting out of this is AdTech.”

“And if you are thinking about how do I actually monetize my wireless platform, the answer is probably not just driving usage from subscribers because they have been doing that for a long time and it hasn’t generated any extra revenue, it’s probably finding a way to monetize [through advertising].