Verizon Denies Pursuit of AOL Acquisition

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in Q3 2014.**

Verizon Communications is said to be exploring a partnership with AOL Inc. that could grant the wireless phone giant access to advertising technology. But Verizon’s top executive denied that the company is engaged in serious talks to acquire AOL.

Verizon is mostly interested in AOL’s programmatic advertising technology, which could be combined with a future online video product, Bloomberg reported. The technology is said to automate the buying and selling of ads.

“The bigger picture here is that Verizon, even with all of its FiOS assets, seems to believe it needs some additional expertise and technology to make a real go of a mobile video service,” said Rich Karpinski, 451 Research principal analyst, commenting on Bloomberg’s story.

Verizon plans to debut an over-the-top mobile video product sometime in mid-2015. At the end of the third quarter, more than three-quarters (77 percent) of Verizon Wireless’ 35.4 million retail accounts under contract owned smartphones. Speaking last month at a UBS investor conference, Verizon CFO Fran Shammo distinguished the planned service from linear television and cited the importance of providing live events such as NFL games. 

“But it’s around live real-time events and that’s what we saw with the World Cup; that’s what we see with the NFL,” Shammo said. “People want to watch when they are traveling on something that’s real-time live that they don’t want to miss. You’re not going to replay an episode, a TV episode on a mobile handset.”

While unidentified sources told Bloomberg that Verizon is seeking to expand its mobile-video offerings through a joint venture with AOL or acquisition, a partnership rather than a blockbuster purchase is the more likely scenario.

“I think AOL along with lots of other media companies are potential for us to do partnering, on a commercial basis or whatever,” Reuters quoted Verizon CEO Lowell McAdam as saying at a conference Tuesday.

“But to say that we are having significant acquisition discussions is really not accurate,” McAdam said.

New York-based Verizon may not be ready for another monster deal. It was less than a year ago that the company completed its $130 billion acquisition of Vodafone Group Plc’s 45 percent interest in Verizon Wireless. On Tuesday, ahead of its fourth-quarter earnings announcement on Jan. 22, Verizon reported that its wireless growth remained strong throughout the quarter, with more customers clamoring for 4G smartphones and tablets.

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