Apollo Global Management, the private-equity firm co-founded by disgraced Wall Street tycoon Leon Black, agreed to buy two of the top has-been names from the early days of consumer internet firms – Yahoo and AOL – for $5 billion.
The deal to buy Verizon’s media unit, including Yahoo and AOL, was quickly met with mockery after it was announced on Monday. “This is interesting news,” podcast host Mark Eastman said. “Also, they are offloading pet rocks and a disco ball manufacturer.”
Indeed, Yahoo and AOL have fallen a long way since being ubiquitous players back when the internet mushroomed up as a gigantic consumer marketplace and public square in the 1990s and early 2000s. The companies had combined market values exceeding $300 billion around the turn of the millennium, before they were overtaken by today’s Big Tech giants.
CNET News editor Stephen Shankland pointed out that today’s purchase price for Verizon’s entire media business is about equivalent to the difference between what Microsoft was willing to pay in negotiations to buy Yahoo for nearly $45 billion and the price that Yahoo’s management was demanding.
Yahoo and AOL were long past their peaks when Verizon bought them for a combined $9 billion in 2015 and 2016, respectively. Traffic has further eroded since then. For instance, Yahoo lost 34% of its audience between 2017 and 2019, and suspension of its popular comments section on news articles last year may have led to more losses.
Verizon will receive $4.25 billion in cash for Yahoo, AOL and its other media assets. It will retain a 10%, $750 million stake in the business, which will be renamed simply Yahoo, Apollo said. Yahoo’s Guru Gowrappan will stay on as chief executive.