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Verizon: $4.4 Billion AOL Acquisition Will Bolster Video Strategy

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in Q1 2015.**

Verizon on Tuesday announced a pact to acquire AOL Inc. for $4.4 billion, or $50 per share, in a deal that the telecommunications giant said will strengthen its LTE wireless video and so-called OTT (over-the-top) video strategy.

Through the acquisition, Verizon will control such brands as AOL.com, Engadget, TechCrunch and The Huffington Post. Verizon said AOL’s other important assets include a subscription business, original video content, and advertising platforms.  

“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience,” Lowell McAdam, Verizon chairman and CEO, said.

New York-based Verizon anticipates the merger will close this summer following customary regulatory approvals and closing conditions.

AOL chairman and CEO Tim Armstrong will continue to lead AOL operations after the company becomes a wholly owned subsidiary of Verizon. In a CNBC “Squawk Box” interview, Armstrong said AOL has turned itself around over the last five years.

“We outperformed the S&P 500 for the last five years, and when you look at where we are today and where we’re going, we’ve made AOL as big as it can possibly be in today’s landscape,” he said in the interview. “But if you look forward five years, you’re going to be in a space where there are going to be massive, global-scale networks, and there’s no better partner for us to go forward with than Verizon.”

Last week, AOL reported that first quarter revenues increased 7 percent to $625.1 million, thanks in part to growth in global advertising.

AOL certainly has come a long way since the nation was reliant on dialup Internet service in the 1990s. But while the company is known today more for its advertising and content, AOL still serves roughly 2.16 million dialup subscribers, as was revealed in its quarterly earnings.

Yesterday, before Verizon had announced its plans to acquire AOL, Rich Karpinski of 451 Research said that mobile operators such as Verizon could target AOL’s dialup Internet customers with offers to provide fixed LTE services.

Now that AOL is merging with Verizon, dialup in America may indeed be on the brink of death.


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