With Comcast-Time Warner Cable now a distant memory, your next billion-dollar acquisition is Verizon and AOL.
Verizon Communications today announced that it will buy the Internet turned media company for $4.4 billion.
Verizon said the purchase will further drive its LTE and Internet video strategy, as well as plans for the Internet of Things.
"Verizon's vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience," Lowell McAdam, Verizon chairman and CEO, said in a statement.
Verizon is currently prepping an Internet TV service, and has announced plans for AwesomenessTV content to start. AOL has some of its own original programming, not to mention media properties like The Huffington Post, TechCrunch, Engadget, MAKERS, and AOL.com.
McAdam called AOL "a digital trailblazer" that, like Verizon, has embraced "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," McAdam said.
Once the deal closes, AOL will become a wholly owned subsidiary of Verizon. Tim Armstrong will continue to lead AOL.
Verizon offers Internet and TV service via FiOS, though the platform has no plans for expansion. McAdam has acknowledged that more and more people are cutting the cord lately, prompting Verizon to explore the Internet TV option.
At a Jefferies investor conference today, John Stratton, Verizon's executive vice president and president of operations, echoed McAdam's comments. The industry is in the early stages of an "interupption," he said, and there's a "lesser dependency" on triple play at the moment.
"We are principally a broadband company," Stratton said, so the shift to Internet TV "is not a disturbing phenomenon."
"Triple play still matters a lot," he said, "but we see a very significant shift in the desire of our customers in the way we consume video."
Verizon will also experiment with customized bundles for FiOS customers, though some networks, like ESPN, believe that would violate existing contracts. Stratton said today that Custom TV is an effort to "meet the customer's objection" and still have a thriving business model.
That means Verizon will "get into some bumps along the way," he said, referring to the ESPN lawsuit. But content partners need to be flexible, he argued.
AOL, meanwhile, was one of the earliest U.S. ISPs, and still has more than 2.1 million dial-up subscribers, it revealed this week. It had its own major merger in 2000 when it bought Time Warner for $182 billion, but that deal was widely regarded as somewhat of a disaster. Time Warner spun off AOL in 2009.
AOL is now better known for its media holdings, particularly The Huffington Post, which has a large video presence via HuffPo Live.