According to a January 5th report from Bloomberg News, a knowledgeable source is reporting that Verizon Communications has approached AOL Inc. regarding a potential acquisition or joint venture to expand on its mobile-video offerings. Verizon has not yet made a formal proposal to AOL, and negotiations are still ongoing the source, who asked not to be named, noted on Monday.
Verizon (VZ), AOL – Possible joint venture
Industry analysts note that a merger between AOL’s programmatic advertising technology (automated buying and selling of ads online) with mobile video content would help Verizon catch up with AT&T as wireless providers upgrade their offerings. AT&T went all in on a $48.5 billion deal to acquire satellite TV provider DirecTV in 2014.
The Bloomberg sources pointed out that Verizon is seeking expertise in three areas: online content, mobile video and advertising. Of note, the firm has reportedly held talks with several of AOL’s peers regarding how to move forward in those areas.
The sources also noted that the programmatic ads platform could be included with a future online-video product.
More on possible Verizon and AOL merger
A full takeover would give Verizon access to AOL’s 2.3 million paying members and Internet brands such as the Huffington Post, TechCrunch and Engadget. However, the extent of Verizon’s interest in those media properties, which bring in over 200 million unique visitors a month, the fourth-most in the U.S., behind Google Inc., Yahoo Inc. and Facebook Inc., is unclear.
AOL has a market value of about $3.5 billion, and Verizon has a current market value of a little more than $193 billion.
A few AOL members still use the firm’s dial-up Internet service. The Bloomberg source pointed out that if Verizon acquired the New York-based AOL, it would likely be able to convert some of those customers to its FiOS broadband service. FiOS is Internet, telephone and television service that takes advantage of an already existing fiber-optic network.
Verizon has publicly announced it has assigned three exec to develop a mobile-video service and integrate OnCue, acquired from Intel Inc. last year, and EdgeCast Networks which it picked up in December 2013.
Of interest, AT&T and The Chernin Group announced a joint venture to acquire and develop online-video services back in April of last year.