In a move that surprises almost no one in the media business, Verizon confirmed on Monday that it is selling off its media business to Apollo Global Management in a deal said to be worth $5 billion. Which is about $4 billion less than what Verizon paid for the two companies.
Verizon will retain a 10 percent interest in the new company, which will be known as Yahoo. Once the deal meets the closing conditions, the new Yahoo will be run by CEO Guru Gowrappan.
Apollo is a massive private equity firm that owns an interest in more than 150 companies as part of a portfolio worth more than $80 billion. Portfolio companies include a wide range of industries and well-known names, from Chuck E. Cheese and Hostess Brands to QDoba and the Endemol Shine Group.
By any estimation, Verizon's media ventures could best be described as a tsunami of bad decisions. Verizon originally paid $4.4 billion for AOL in 2015 and $4.5 billion for Yahoo in 2017. Investments which seem ill-advised in retrospect, given that both of those companies had already made massively bad decisions of their own.
Verizon tried to lump AOL and Yahoo into a division initially called Oath, which also included other random media properties such as Edngadget and TechCrunch. Within a year, the division was renamed the Verizon Media Group and efforts began to begin selling off some of Verizon's media assets.
From the beginning, the primary difficulty was that Verizon owned a number of well-known properties that had been bought for inexplicably high valuations. And as they sold off assets, they were forced to drastically cut valuations to make the deals work.
Yahoo had purchased Tumblr for $1.1 billion in 2013 and Verizon sold it in 2019 for an amount believed to be in the range of less than $3 million. AOL had acquired Huffington Post in 2011 for $315 million and when it sold the site to Buzzfeed in 2020, Verizon noted in its resulting quarterly earning report that sale had resulted in a $119 million charge (i.e. "loss").