Verizon Communications said Monday it had agreed to sell Yahoo and AOL to private equity firm Apollo Global Management in a $5 billion deal, signaling the end of its troubled venture into online media.

The deal represents a loss for Verizon, which paid $4.4 billion for AOL in 2015 and then spent another $4.5 billion on Yahoo two years later, betting that the struggling digital pioneers could offer an alternative way for marketers to reach potential customers outside tech behemoths Google, Facebook, and Amazon.

Apollo will pay $4.25 billion in cash for a 90% share of Verizon Media, with Verizon keeping a 10% stake and $750 million of additional preferred stock in the new company, called Yahoo, that will be formed to operate the business.

“With Apollo’s sector expertise and strategic insight, Yahoo will be well-positioned to capitalize on market opportunities, media, and transaction experience and continue to grow our full-stack digital advertising platform,” Verizon Media CEO Guru Gowrappan said.

Apollo has invested heavily in digital media, acquiring the photo printing business Shutterfly, the web-hosting company Rackspace, and Cox Media Group, which owns TV and radio stations throughout the country.

At the time of the AOL acquisition, Verizon’s then-CEO, Lewis McAdam, said the deal was part of its “strategy to provide a cross-screen connection for consumers, creators, and advertisers to deliver that premium experience.”

But as The Wall Street Journal reports, “the stitched-together media group couldn’t keep up with its technology rivals’ explosive sales growth, and Verizon in 2018 wrote down about half of the value of the media brands it had acquired.”

Under Hans Vestberg, its current CEO, Verizon has focused on building out its new 5G network.

Verizon Media’s revenue has increased more than 10% over the past two quarters amid rebounding demand from advertisers looking to tap an online shopping boom during the coronavirus pandemic. According to The New York Times, “Apollo is hoping that an increased focus on the individual brands it believes are lost inside a large corporate empire can accelerate that growth.”

David Sambur, the firm’s co-head of private equity, said: “This is a typical Apollo deal in that these are very iconic, industry-leading, businesses, but they need a little tender loving care.”

Photo by Rob Kim/Getty Images

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