Verizon has said it will buy AOL for $4.4 billion, valuing shares in the phone company at $50, 17 per cent higher than their Monday close and 23 per cent higher than their three-month average.
Verizon is eyeing AOL’s advanced technology for selling advertising and its high-quality web video capabilities as it looks to grow in those two areas, according to the Wall St Journal.
The telecoms giant had announced plans to launch a video service focussed on mobile devices this summer, mixing paid, free and ad-supported connect that will stand apart from traditional television.
Fran Shammo, chief financial officer, said Verizon’s mobile video service would broadcast shorter shows, not necessarily sticking to the usual 30 or 60 minute formats, and live stream sports and concerts using mobile phone airwaves.
AOL saw first quarter profits swell in the first three months of 2015 driven by growth in advertising and search revenues. Revenue from AOL platforms increased 21 percent compared to the same period last year, while revenues from AOL-owned content dropped 4 per cent.
Verizon’s annual revenue hit $127 billion last year, while it made a profit of $12 billion.