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Verizon Sees Mobile Opportunity In AOL Purchase

NEW YORK — Verizon Communications entered into an agreement to purchase AOL for around $4.4 billion to drive the telecom company’s ambitions in the mobile video and mobile advertising markets.

Verizon said the acquisition “further drives its LTE wireless video and OTT (over-the-top video) strategy” and will also support Verizon’s Internet of Things platforms.

The telcom company called AOL “a leader in the digital content and advertising platforms space” and said the acquisition would create “a scaled, mobile-first platform offering.” The acquisition gives Verizon access to AOL technology used for selling ads and delivering web video.

The acquisition will likely support Verizon’s plans this summer to launch new video services targeted to mobile devices. Last month, Verizon chief financial officer Fran Shammo said during a conference call with investors that the service will deliver paid, free and ad-supported content that won’t look like traditional TV programming.

Verizon and AT&T both view video as key driver of wireless-data demand in the future, and Verizon has already made moves to drive up its video traffic over cellular, including an agreement with the NFL Licensing of Ultra HD Blu-ray players will begin in July. Ultra HD Blu-ray On Pace For Fall Debut to stream some games live.

Verizon’s interest is video is further evidenced by its January 2014 purchase of OnCue, Intel’s OTT video product, which Verizon said it would use to bolster its online- and mobile-video endeavors. Verizon also teamed up in 2012 with Redbox to create the Redbox Instant streaming service, though the operation was closed down in 2014.

Thanks to its FiOS TV service to homes, Verizon already has relationships with many media providers to obtain content for its planned mobile-video service.

AOL’s content assets include The Huffington Post, TechCrunch, Engadget, Makers, and AOL’s millennial-focused OTT original video content, Verizon said. AOL’s other key assets include its advertising platforms and subscription business.

“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” said Verizon chairman/CEO Lowell McAdam. “This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”

Verizon expects the purchase to close in the summer following regulatory approval. AOL will become a wholly owned subsidiary of Verizon.