Verizon Wireless has finally done it. America's biggest major wireless carrier has officially completed its acquisition of AOL for $4.4 billion. Once one of the most significant early pioneers in popularizing Internet services, AOL now becomes a subsidiary of Verizon Communications, the parent entity of Verizon Wireless.
AOL may now be taking on a subsidiary role under the Verizon group, but the deal could be considered a victory of some sort for AOL. The company had been dangerously close to becoming a forgotten brand in wireless in recent years. It was only through the efforts and leadership of Tim Armstrong, AOL's Chief Executive, that the company was turned into a good target for prospective buyers.
More than a decade ago in 2000, AOL had merged with Time Warner, but the $160 billion deal went on to become a colossal failure leading to massive losses for all those involved. Time Warner eventually spun off AOL nine years later.
Obviously, AOL is hoping that this latest Verizon Wireless merger fares better. As for Verizon, the carrier looks to take advantage of some perks. The terms and conditions of the acquisition allows Verizon to gain control of various online advertising resources that AOL, under Armstrong's leadership, has gotten hold off over the last few years.
For now, Verizon is king of wireless, but it will need to explore new areas in order to continue to expand. That is why the carrier is looking into video content, and is even planning to launch a brand new service that delivers video via the Internet in order to boosts its Fios home broadband efforts.
AOL's online ad tools and various media sites could be the key in realizing Verizon's plans. Despite having been in decline in recent years, AOL still has the network that can handle worldwide scale in delivering videos to consumers. And the broader the coverage, the wider the range of video content that Verizon will be delivering. This will include live videos, concerts, special events, sports games, and other in-demand video content. And because it is on a global scale, the video content could vary depending on each region covered.
Apart from the subscription, Verizon would be earning substantially from advertising. According to Marni Walden, executive vice president of product innovation and new businesses at Verizon, they are confident that the company's new video content service will not be violating any of the new net neutrality rules recently put in place by the Federal Communications Commission.
As for AOL, it can be considered business as usual. Armstrong will still be heading all AOL operations, while Bob Toohey, president of Verizon Digital Media Services, will report to Armstrong, who in turn will report to Walden.
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