Verizon buys AOL for $4.4bn

US telecoms giant Verizon has agreed to purchase internet firm AOL for US$4.4bn, as it set its sights on entering the crowded online video marketplace.

Verizon, the US’s biggest mobile company, said the all-cash deal would expand its 4G wireless and internet video ambitions, tapping into the “market shift to digital content and advertising.”

The acquisition will give Verizon access to AOL’s video content and advertising platforms, as well as websites the Huffington Post, Techcrunch, Engadget, Makers and AOL.com.

Verizon’s takeover includes around US$300m of AOL debt as well as the latter’s dial-up subscription business. Upon completion, AOL will become a wholly owned subsidiary of Verizon.

AOL’s chairman and chief executive Tim Armstrong will continue to lead AOL operations after the deal closes.

Lowell McAdam, Verizon chairman and CEO, said: “At Verizon, we’ve been strategically investing in emerging technology, including Verizon Digital Media Services and OTT, that taps into the market shift to digital content and advertising.

“AOL’s advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams.”

The news comes a year after Verizon acquired Intel’s troubled OnCue TV unit with the aim of launching its own OTT service.

The company also announced it would make more than 200 hours of AwesomenessTV-produced content per year available through an ATV-branded online channel. This will be joined by a family-orientated DreamWorksTV channel.

AOL has been ramping up its original video and programming ambitions over the last 12 months. Since launching, its AOL On network has unveiled nearly 50 original series worldwide including SteveBuscemi’s unscripted web series Park Bench.

The company recently partnered with NBCUniversal on a far-reaching agreement that will see the firms co-develop and coproduce programming, including an original web series. AOL has also teamed up with GroupM Entertainment to make a new web series, to be fully funded and coproduced by GroupM.

Verizon is offering US$50 a share for AOL, compared with AOL’s closing price of US$42.59 on Monday.