Closing This Summer: Verizon To Scoop Up AOL For $4.4 Billion

MojoKid writes with this excerpt from Hot Hardware: We learned this weekend that AOL's dial-up business still has over 2 million customers who pay on average just under $21 per month for service. Regardless of how strange that seems to those of us that salivate over the prospects of gigabit Internet, folks are still clinging to 56k modems are adding millions to AOL's bottom line. However, also recall that AOL has a massive digital advertising platform with a heavy focus on the mobile sector and also owns a wealth of popular web destinations including Engadget, TechCrunch, and The Huffington Post. With this in mind, it shouldn't be too surprising that Verizon has offered AOL a marriage proposal. Verizon is acquiring AOL for an estimated $50 per share, which brings the total value of the transaction to $4.4 billion. Here are stories from The New York Times, NBC News, and NPR on the proposed sale, which it's worth noting isn't yet final, and is subject to regulatory approval.

Comments

$21 paid to AOL

[Crashmarik]

$100 for a 56k modem

Not having to talk to Comcast PRICELESS

Re:$21 paid to AOL

[schlachter]

Not being ABLE to talk to Comcast...because you're modem is taking up the phone line...PRICELESS?

Ah ... AOL .. so overrated ...

[gstoddart]

Yeah, this is the same AOL who 'bought' Time Warner when they were massively overly valued in the dot com silliness, using over-inflated funny-money stocks.

Time Warner couldn't puke them out fast enough to get them off their back, because AOL was so grossly inflated in value it wasn't funny.

I sincerely hope from what I've heard of Verizon that they choke on AOL like Time Warner did.

Honestly, is AOL worth $4.4 billion? Someone better be doing some proper due diligence on this one.

Re:Ah ... AOL .. so overrated ...

[phantomfive]

Honestly, is AOL worth $4.4 billion? Someone better be doing some proper due diligence on this one.

With annual revenue of $2.5 billion, probably. Seriously, this is something you could have checked out.

After dialup disappeared, AOL had plenty of cash in the bank. So they became a type of venture capital. They bought Huffington Post, Tech Crunch and many others. Since they actually have a lot of web traffic, they started an advertising business.

If you consider that Google and Facebook are essentially ad companies, with ad networks that span far beyond their own website, AOL is another one. Any time you see a video ad on the internet, there's a decent chance it's from AOL (but please use adblock, malware gets into those things).

Re:Ah ... AOL .. so overrated ...

[phantomfive]

Honestly, after AOL purchased Time Warner for $160 billion or so of what everybody knew at the time was grossly overrated stock, AOL is not an entity I've kept tabs on.

Google finance is your friend. Any time you want to know if a company is worth their stock price, check out their revenue and profits.

Re:Ah ... AOL .. so overrated ...

[omnichad]

At the time that was happening everybody was like "wait, Time Warner has publishing, TV, print media, movies, and AOL has ... email?".

At the time, I was thinking AOL only thinks of the Internet as "content" rather than a global interconnected network. And it's become even more true today to the average consumer. Buying a content company is a lot more logical than you would think - but they were a bit early, considering they had dial-up to work with.

Re:Ah ... AOL .. so overrated ...

[phantomfive]

So you're basically just bloviating. Fair enough/

Re:Ah ... AOL .. so overrated ...

[gfxguy]

Yup... I work for Turner Broadcasting, which was bought shortly after I started by Time Warner, which was bought shortly after that by AOL. I was really in disbelief at the time... AOL had no appreciative assets - they had computer infrastructure, and we all know how fast computer hardware depreciates - and they had customers. And that's it. Depreciating hardware and customer numbers that were already dropping like a rock. They tried to make us all use AOL software, but there was too much push-back. After using their over-inflated stock price to buy a company with actual assets, they eventually dropped AOL from the AOL-Time Warner name, pushed it to the side, and let languish. I'm surprised they've managed to hold on this long.

Re:Ah ... AOL .. so overrated ...

[iamgnat]

At the time that was happening everybody was like "wait, Time Warner has publishing, TV, print media, movies, and AOL has ... email?".

At the time, I was thinking AOL only thinks of the Internet as "content" rather than a global interconnected network. And it's become even more true today to the average consumer. Buying a content company is a lot more logical than you would think - but they were a bit early, considering they had dial-up to work with.

I was an employee at the time and you partially hit the nail on the head there.

Steve Case was by far the best CEO I've ever worked under. Both naturally charismatic and a strong long term vision. As far back as the Q-Link days he never wanted to be a service provider or a technology company. He wanted to create a new medium for people to get their content and us buying TW was supposed to be the realization of that idea.

Unfortunately Steve had no idea what he was getting into going up against the entrenched old media execs and his allowing them to retain some control was AOL's undoing.

At the time of the purchase teams at AOL had developed working POCs for streaming music and video delivery that worked with minimal buffering at 19.2k while retaining good quality (of course that was before HD took off). What Apple did with the iTunes store we had done long before. All we needed was the keys to the TW media kingdom and the digital media landscape would have looked a lot different. We all know what old-media thinks about digital content though...

Steve's last misguided act in the saga was to sacrifice himself to get Ted Turner out, but there was no one that ever replaced Steve's drive and passion and TW took more and more control.

Contrary to gstoddart's uneducated understanding of things, AOL was the only profitable (mostly due to the dialup income) portion of TW after history had been re-written. TW bled the money out and into other money pits until there was nothing left and they finally let AOL go.

AOL always got a bad rap and many of my co-workers were afraid to admit they worked there. It was a good company that filled it's role very well. It was never a service meant for those with technical ability. It was meant for those that barely wanted to know what a computer was and it served them very well. It saddens me still how things turned out and that they've fallen into typical flailing around that many companies seem to do these days when trying to chase short term profits.

Re:Ah ... AOL .. so overrated ...

[ubrgeek]

The deal, done over the weekend by staff sequestered in two floors of an office building, was seen by those of us at TW as being no different than the Excite@Home merger. TW's Road Runner service would have access to more content than had previously been available via TW's Pathfinder service (when we were even allowed access to that stuff.) Myself and a few others pushed and pushed for Road Runner to make a deal with AOL for their content and were repeatedly told it would never happen. So instead we created our own. Hell, at one point we contemplated creating our own instant-messaging client.

The biggest is that TW was (is? No idea. Haven't been there in more than a decade) so stove-piped we knew the merger was doomed to fail. One example was when RR - the cable modem business - temporarily risked losing the "right" to use the cartoon character's likeness because the other part of TW that controls cartoons (Warner Bros? Don't remember) didn't like that we were doing things like using "Beep! Beep!" in our ads ... the official, trademarked term is "Meep! Beep!"

Crappy service

[jfdavis668]

Great! Now I can have dial-up and crappy service rolled into one!

The first salvo against Net Neutrality?

[Anonymous Coward]

Net Neutrality rules require carriers to treat everyone's content like everyone else's - you can't throttle or restrict traffic based on who it comes from or where it's going.

However, as I read them, the rules are less clear on what content PROVIDERS can do with their own content. And Verizon just bought (primarily) a bunch of content.

I can't charge extra to carry certain content? Fine. Now I buy the content, and change how it's delivered. I have "Huffington Post Free Edition," with limitations on speed, multi-media content, etc. Then, as an EXCLUSIVE offer to Verizon customers, I have "Huffington Post Express," which is the full site delivered at an actually useful speed. If Time Warner Cable wants to get the "real" Huffington Post (i.e. the "Express" edition) delivered to their customers, they have to license it.

Hey, presto! A world where the network providers actually CAN charge to deliver content preferentially. All it needs is for them to own the content in the first place.

I predict we'll see a lot more of these vertical mergers of content providers and networks, and there will be an increasing wave of "subscribers only" offers in the near future.

Re:The first salvo against Net Neutrality?

[SpockLogic]

I predict we'll see a lot more of these vertical mergers of content providers and networks, and there will be an increasing wave of "subscribers only" offers in the near future.

None will benefit the consumer.

Re:The first salvo against Net Neutrality?

[Archangel Michael]

You just made the case for what I have been proposing for a long long time. The problem isn't a network problem, it is a captive last mile customer base problem. Change that dynamic (last mile) and you change the world.

Each Municipality should build out its own last mile infrastructure to a COLO facilty and then companies like Comcast, Netflix and Time-Warner can find creative ways of providing services the customer (us) actually want. As long as the BIGTELCO companies have a captive audience, then we (the "customers") are actually the product.

AOL?

[Lunix Nutcase]

Lucky for Verizon, AOL's 56k isn't that much slower than their supposed "broadband" DSL.

Re:AOL?

[omnichad]

Verizon is rolling backwards in technology. First, they stopped rolling out new FiOS. Then, they forced their remaining customers onto Uverse with a flawed modem. Now, they're giving up and rolling all the way back to dial-up. Probably gaining mostly customers who chose AOL so they wouldn't have to deal with Verizon.

Seriously, the NVG510 modem they rolled out for Uverse has a flaw that blocks the Internet from working for hours or days at a time and redirects all web traffic to an error page. There is a workaround involving rooting the modem and changing some settings and DNS servers, but the only firmware updates Verizon has put out are to block people from rooting the modem.

Re:"clinging to dialup"

[Megane]

In other news, 50,000 grandmas will now have to find a new dial-up service.

Can you hear me now?

[jfdavis668]

Pshhhkkkkkkrrrrkakingkakingkakingtshchchchchchchchcch...

AOL is still very much alive

[sjbe]

Did I miss something? There is no company called AOL.

Apparently you missed a lot of things. There very much is a a company called AOL Inc which has annual revenues of around $2.3 billion.

Time Warner bought them out like 10 years ago.

It was 15 years ago and you have it backwards. AOL bought Time Warner, not the other way around. AOL shareholders owned 55% of the merged company.

Is Time Warner the one selling off the AOL branch of products?

AOL was spun off from Time Warner six years ago into an independent company.

If so, this is a Time Warner-Verizon deal.

No it isn't. Time-Warner has nothing to do with this deal.

Re:AOL is still around?

[Anonymous Coward]

AOL is still around because some of us cling to old technologies because they work better. MP3s downloaded from dial up sound warmer than ones downloaded through an ethernet cable. Sometimes it is worth the wait.

Re:What?

[omnichad]

The US has plenty of infrastructure for electricity and roads. But for plenty of people, low population density is a good thing and they'll gladly trade off not being profitable to a telecom to be able to live in an area where they can easily afford a large home on a relatively large chunk of land.

That said, I'm all for Internet becoming a public utility.

Re:AOL is still around?

[sizzzzlerz]

You obviously weren't using these cables. They'll give you the warm, rich sound you've been looking for.

Re:AOL is still around?

[Anonymous Coward]

When floppies started going away, AOL started shipping their software on CDs.

That was their downfall. They should have shipped CD-RWs.

Will you abandon AOL-hosted sites?

[david.emery]

Given my great distrust of Verizon, I'm seriously considering abandoning/boycotting any site currently hosted by AOL, such as "Engadget, TechCrunch, and The Huffington Post."

Re:What?

[gfxguy]

Two million on dial-up? One tenth of that would've still made me surprised. USA truly is a third world shit-hole in many ways.

Because some people choose to live in the countryside instead of the city? Or that dial-up might be cheaper and a lot of people don't use bandwidth the way you do? I think you have weird priorities.

Verizon Leadership

[GateGuy]

I can not understand the leadership at Verizon. They seem to always do the opposite of what they should do.

For example, when the iPhone first came out, Verizon turned Apple down and lost quite a few subscribers to ATT. I wonder if the executive that made that decision kept his job?

More examples:
Red Box deal
Intel TV assets
and now AOL

There never appears to be a coherent thought process. The layoff thousands 3 weeks ago, going to lay off a lot more on May 22nd, yet there is money to waste on AOL. Funny thing is, I will probably be laid off after this year's contract negotiations are over, but my son will start working for Vz in June.

I bet they bag Wireline with the load debt so that Wireless books look great.

Re:AOL is still around?

[NormAtHome]

My thought exactly.

And yet they do, much to the consternation of any IT or tech savvy people who have to work on peoples computers that has that AOL crap software AND the people have Verizon FIOS, Comcast, Cablevision or Optonline and yet they still insist on using that dreadful, horrible, useless AOL software rather than a modern browser like Chrome or FireFox.

Re:Exede

[dryeo]

Here where I live, there are mountains and trees blocking the view of the satellites and they're not my trees to cut down. As I'm 40 miles from the big city there is no cell service either. Phone lines are shit as well, 26.4 connection.

Just great...

[sconeu]

If you thought cancelling your AOL account was difficult before...

Now you get to deal with the Verizon Customer Retention Specialists!!!!!!

Re:AOL is still around?

[Anonymous Coward]

I pay for an AOL account. It's for my Mom in rural Montana. I've tried to explain to her that she can use my Dad's local dialup account, use Gmail, and save me $35/month but they just don't grasp that you can share a dialup but keep mail separate.

I got a letter in the mail from her once. Inside was a funny email someone sent her. She printed it out. Put it in an envelope. With a stamp. And mailed it to me.

Hopefully my own children will put me in a home with I get that way.

Re: AOL is still around?

[Anonymous Coward]

Your mom is ultra hipster! Snail mailing an Email is so meta it caused my mustache to uncurl!