After purchasing AOL last year, Verizon is making yet another odd purchase. Verizon is set to announce it will buy Yahoo for about $4.8 billion. This announcement which will be made today before the markets open, will change the future of Yahoo.
This purchase is slightly over the $4.4 Billion which Verizon paid for AOL last year. According to Recode, terms have not been finalized, but Yahoo’s boards settled on Verizon as its new owner. Verizon won the bid amid so many other competitors including AT&T, private equity firm TPG, and a quick group led by Quicken Loans’ Dan Gilbert.
Why Verizon Wants to Buy Yahoo
In a nutshell, what interests Verizon is to buy Yahoo ads and content businesses for the same reason it acquired AOL last year for . And that is to build the kind of scale that’s necessary to make money from digital advertising on mobile devices, as growth in the traditional telecom business slows.
“Verizon is trying to pivot its business from analog to digital,” analyst Craig Moffett of Moffett Nathanson told the Wall Street Journal earlier in April. “Verizon believes that a combined AOL/Yahoo would provide the digital advertising platform they need to execute their video reinvention strategy.”
Services like Yahoo Sports and News are still well liked. Other Yahoo properties will likely be jettisoned once the new parent company takes over.It’s also not a huge dollar amount, considering that social services like WhatsApp and LinkedIn have recently sold for four to five times as much as Verizon will reportedly buy Yahoo for.
And there’s Tumblr and Flickr to consider as well. It’s not clear what Verizon’s plans are for Yahoo yet — it could operate it as a subsidiary, or wrap it all under the Verizon cloak — so there’s reason to be concerned your favorite service may vanish or change drastically.