Verizon to Promote Yahoo, AOL for $5 Billion to Apollo

The Wall Road Journal earlier reported the potential sale of Verizon’s media belongings to Apollo. Verizon VZ 0.80% Media, which largely struggled to develop in opposition to Alphabet Inc.’s Google and Fb Inc., generated $7 billion in income final yr.

Apollo’s technique for the enterprise revolves round getting extra income from every of its 900 million lively month-to-month customers. Verizon’s VZ 0.80% positioning of the media enterprise as a complement to its core cell enterprise—geared toward serving to it add subscribers and scale back the quantity of people that stop—meant it hasn’t pursued some alternatives to maximise the worth of every asset, executives on the private-equity agency mentioned.

For instance, Yahoo has been a preferred platform for sports activities betting, however isn’t formally licensed to host playing. Apollo, nonetheless, is licensed in additional than 200 jurisdictions for playing.

“This can be a typical Apollo deal in that these are very iconic, {industry} main, companies, however they want just a little tender loving care,” David Sambur, the agency’s co-head of personal fairness, mentioned in an interview.

Verizon Media’s income has elevated greater than 10% over the previous two quarters, helped by rebounding demand from advertisers trying to faucet an internet buying growth through the coronavirus pandemic. Digital-ad gross sales are anticipated to speed up within the coming months as customers begin spending additional cash on journey and different actions.

Different suitors beforehand confirmed curiosity in shopping for off sure items of the media unit, which incorporates web sites corresponding to TechCrunch and Yahoo Finance, however weren’t keen to make a proposal for the entire portfolio, in accordance with an individual aware of the matter.

For Apollo, shopping for your complete portfolio means needing to have a view on the best way to run every of the various properties. The agency makes a speciality of doing such advanced offers and has centered on boosting development at different web corporations it owns, together with online-photo-services firm Shutterfly Inc.

Verizon Chief Government Hans Vestberg mentioned in an interview the corporate’s long-term technique to offer “network-as-a-service” to prospects over fiber-optic and mobile connections made the media enterprise a greater match underneath new homeowners. He portrayed the sale as an end result years within the making.

“We prioritize our investments with the community,” Mr. Vestberg mentioned on Monday. “This conclusion got here a reasonably very long time in the past.”

Verizon collected a few of the internet’s best-known manufacturers beginning in 2015 with its buy of AOL, adopted by its 2017 acquisition of Yahoo. AOL’s then-chief, Tim Armstrong, known as the brand new enterprise a brilliant channel for advertisers to achieve a whole bunch of hundreds of thousands of customers. The corporate on the time touted an lively consumer base of multiple billion folks.

Executives framed the newly named Oath enterprise in its place method for entrepreneurs to achieve potential prospects exterior of a digital ecosystem dominated by Google, Fb and Amazon.com Inc. However the stitched-together media group couldn’t sustain with its expertise rivals’ explosive gross sales development, and Verizon in 2018 wrote down about half of the worth of the media manufacturers it had acquired.

In 2018, Verizon named Mr. Vestberg CEO, choosing a telecom-industry veteran with a penchant for sketching out engineering ideas on whiteboards for its prime job. The Swedish transplant has spent little time discussing media and has extra usually touted the cellphone provider’s plan to spice up income by means of the development of a next-generation wi-fi community. Verizon has been shrinking the media unit, reducing jobs and promoting off its Tumblr running a blog platform and HuffPost information operation.

Guru Gowrappan, the present head of Verizon Media and a former Yahoo govt, will proceed to run the enterprise after the deal. The companions count on the transaction to shut within the second half of the yr.

The media division, which employs about 10,000 folks, began with 14,000 staff in 2017. Verizon as an entire employed about 132,000 employees on the finish of 2020.

Verizon didn’t specify how it will use the sale proceeds, although executives have beforehand mentioned they might make debt funds a precedence. The cellphone provider’s borrowing swelled this yr after it dedicated roughly $53 billion to safe wireless-spectrum licenses auctioned by the Federal Communications Fee.

Different telecommunications corporations are likewise reassessing their priorities. The Journal has reported that AT&T Inc. final yr started to discipline bids for a lot of the digital-ad enterprise previously referred to as Xandr. The unit, which incorporates operations acquired from the AppNexus digital-ad trade for $1.6 billion in 2018, has elevated gross sales however has failed to satisfy executives’ aggressive targets.

—Ben Mullin and Micah Maidenberg contributed to this text

Write to Miriam Gottfried at Miriam.Gottfried@wsj.com and Drew FitzGerald at andrew.fitzgerald@wsj.com