Verizon’s Deal: A Move to Compete With Facebook, Google, Comcast?

The company announced that it's buying Yahoo.

Ken Wolter /

Ken Wolter /

Verizon sealed a big deal on Monday — it’s buying Yahoo for $4.8 billion in cash.

The long-awaited deal positions the company to compete as more than just an access provider, and with its purchase of AOL for $4.4 billion last year, it seems the company is building a digital media and advertising platform that may be able to compete with the likes of Facebook and Google.

But Yahoo is being acquired for a very small fraction of the $125 billion it was once worth at its peak, leading some to call the company a loser in the deal, highlighting the company’s failure to adapt to the rise of social media and mobile.

“Yahoo is definitely a faded star, as well as AOL when Verizon acquired them last year,” said Bob Moore, chief executive officer of Philadelphia-based data analytics company RJMetrics. “Despite their depressed valuations, however, both brands still drive huge audiences to internet properties and can be valuable weapons in Verizon’s plan to become a content player that can better compete with growing media giants like Comcast.”

And Verizon isn’t concealing its plan. The company says it acquired AOL last year to enhance its strategy of providing “a cross-screen connection for consumers, creators and advertisers,” and with Yahoo, Verizon will be “in a highly competitive position as a top global media company, and [Yahoo] will help accelerate our revenue stream in digital advertising,” Verizon’s chairman and CEO, Lowell McAdam, said in a statement announcing the acquisition.

“It’s amazing watching the landscape of media and technology companies converge in the way they have in the past decade, “ Moore said. “Amazon is producing TV shows. Google is building a fiber network. Comcast owns amusement parks, and now through this deal, Verizon is the proud owner of a large portfolio of internet brands, including Flickr and Tumblr.

That portfolio of brands also includes what AOL has invested in and grown, including The Huffington Post, TechCrunch, the web magazine Engadget, the digital platform MAKERS, and ONE by AOL for publishers and advertisers.

Verizon reported that the sale does not include Yahoo’s cash or shares in Alibaba Group Holdings or its shares in Yahoo Japan. The transaction is expected to close in the first quarter of 2017.

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