Yahoo and AOL, kings of the early internet, saw their fortunes decline as Silicon Valley raced ahead to create new digital platforms. Google replaced Yahoo. AOL was supplanted by cable giants.
Now they will become the property of private equity. Verizon, their current owner, agreed to sell them to Apollo Global Management in a deal worth $5 billion, the companies announced Monday.
The business housing the two brands, Verizon Media, is to be renamed (yet again) to Yahoo (sans the brand’s stylized exclamation point), and the sale will also include its advertising technology business. Verizon will retain a 10 percent stake in the newly formed media group, the company said in a statement.
Guru Gowrappan, the head of Verizon’s media business, who will continue to lead the new Yahoo, was optimistic in a note to employees Monday morning. “This next evolution of Yahoo will be the most thrilling yet,” he said in the memo, which was obtained by The New York Times.
championed the deal as part of its “strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium experience.”
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Tim Armstrong, the head of AOL, was part of the package, and he soon persuaded Verizon’s executives to add to its media holdings. Mr. Armstrong orchestrated the 2017 purchase of Yahoo for $4.5 billion — a prize he had been pursuing for years.
In the statement announcing the deal at the time, Mr. Armstrong said, “We’re building the future of brands.”
It was all in the pursuit of almighty “scale,” a business term of art that has almost become a religious mantra in Silicon Valley. The goal was to build a bigger audience to sell more advertising. But the internet’s economics had already shifted years before, and content that users provided free, whether in the form of Facebook posts or YouTube videos, drove much online activity. AOL and Yahoo, despite their big audiences, had become distant also-rans.
Verizon still saw value in Yahoo and AOL. The idea was to give Verizon customers content they couldn’t get elsewhere at a time when all cellphone service offerings were essentially the same. And AOL’s giant ad-tech business could give Verizon a better way to sell advertising on its phones.
departure of Mr. Armstrong and began a restructuring of the media unit. In early 2019, it laid off about 800 workers, about 7 percent of the staff. Last year, Verizon began to dismantle the media group with the sale of HuffPost to BuzzFeed.
Mr. Vestberg called the Apollo transaction “a bittersweet moment” in a companywide memo Monday morning, but he added that the sale “is a big step forward” for the media group.
“I believe this move is right for all of our stakeholders, including the Media employees,” he said. “Our purpose is to create the networks that move the world forward, and this will help us better focus all our energy and resources on our core competencies.”
Verizon has had to spend big to improve its mobile business. In March, it agreed to pay nearly $53 billion to license wireless airwaves that will help the company expand its 5G infrastructure. It also plans to spend $10 billion over the next few years to wire more cell towers and upgrade its systems. The company’s total debt now exceeds $180 billion, and its net debt is more than three times its annual pretax profits. Typically, the industry prefers to keep that ratio closer to 2.5.
For Apollo, the purchase is an opportunity to further invest in the digital media space — an industry it has already put money into, with deals for the photo printing business Shutterfly, the web-hosting company Rackspace and Cox Media Group, which owns TV and radio stations throughout the country. Apollo also has plenty of experience with the complex process of buying businesses spun out from larger companies, which generally requires separation of interwoven financials, systems and, often, key executives.
And Yahoo and AOL still generate plenty of revenue. Verizon’s media division recorded $1.9 billion in sales in the first three months of 2021, a 10 percent gain over the prior year.
regulatory scrutiny of some of the biggest players, like Google. And as digital ads rebound postpandemic, Apollo expects the overall industry to grow.
“Does most of that go to Google and Facebook and Snap and Twitter? Of course,” said Reed Rayman, a partner at Apollo. “But is there still a role for others in the digital media space to benefit from the rising tide, like Yahoo and the other properties? Absolutely.”
Apollo has been on a buying spree in the past few months, announcing deals to acquire Michaels, the chain of crafting stores, and the Venetian Resort in Las Vegas. It has also had a shake-up in its senior ranks, with its co-founder Leon Black stepping down as chairman in March after the revelation he had paid more than $150 million to the convicted sex offender Jeffrey Epstein.
The private equity firm has been on a buying spree in the past few months, announcing deals to acquire the crafts retailer Michaels and the Venetian resort in Las Vegas. It has also had a shake-up in its senior ranks, with its co-founder, Leon Black, announcing in late March that he was stepping down as chairman after the revelation he had paid more than $150 million to the disgraced financier Jeffrey Epstein.
Apollo declined to comment. Verizon didn’t respond to requests for comment. Bloomberg, which first reported the expected deal, said Verizon would maintain a stake in the media arm.
The deal would signal the unraveling of a strategy Verizon heralded in 2015 when it acquired the faded internet giant AOL for $4.4 billion. The purchase was meant to give Verizon a pathway into mobile, with the goal of using AOL’s advertising technology to sell ads against digital content. Verizon doubled down on that strategy in 2017 with its $4.48 billion acquisition of Yahoo, which it combined with AOL under the umbrella Oath.
But Google and Facebook have proved to be formidable competitors in the digital advertising market. Verizon acknowledged their might in 2018 when it wrote down the value of Oath by $4.6 billion, attributing the move in part to “increased competitive and market pressures” that had resulted in “lower-than-expected revenues and earnings.”
Under its chief executive, Hans Vestberg, the company has instead emphasized improving the technology around its mobile business. In March, it agreed to pay nearly $53 billion to license wireless airwaves that will help the company expand its next-generation 5G infrastructure. It also plans to spend $10 billion over the next few years to wire more cell towers and upgrade its systems. The company’s total debt now exceeds $180 billion.
The media business was originally meant to differentiate Verizon from its rivals by giving it unique content offerings, but it didn’t work out that way. The phone carrier instead reached an agreement in 2019 with Disney to offer its new streaming service Disney+ free to its customers. (AT&T, by contrast, spent $85 billion to buy Time Warner in 2018 to create its own streaming platform, HBO Max.)
In 2018, Verizon announced the departure of Mr. Armstrong. The group was restructured and in January 2019, it laid off about 800 workers, or about 7 percent of the staff.
Last year, Verizon began to dismantle the media group with the sale of HuffPost to BuzzFeed.
RIO DE JANEIRO — China was on the defensive in Brazil.
The Trump administration had been warning allies across the globe to shun Huawei, the Chinese telecommunications giant, denouncing the company as a dangerous extension of China’s surveillance system.
Brazil, ready to build an ambitious 5G wireless network worth billions of dollars, openly took President Trump’s side, with the Brazilian president’s son — an influential member of Congress, himself — vowing in November to create a secure system “without Chinese espionage.”
Then pandemic politics upended everything.
With Covid-19 deaths rising to their highest levels yet, and a dangerous new virus variant stalking Brazil, the nation’s communications minister went to Beijing in February, met with Huawei executives at their headquarters and made a very unusual request of a telecommunication company.
“I took advantage of the trip to ask for vaccines, which is what everyone is clamoring for,” said the minister, Fábio Faria, recounting his meeting with Huawei.
hoarding many millions of doses for themselves — has offered a diplomatic and public relations opening that China has readily seized.
closely aligned with Mr. Trump, disparaged the Chinese vaccine while it was undergoing clinical trials in Brazil, and shut down an effort by the health ministry to order 45 million doses.
“The Brazilian people WON’T BE ANYONE’S GUINEA PIG,” he wrote on Twitter.
But with Mr. Trump gone and Brazilian hospitals overwhelmed by a surge of infections, Mr. Bolsonaro’s government scrambled to mend fences with the Chinese and asked them to expedite tens of millions of vaccine shipments, as well as the ingredients to mass-produce the shots in Brazil.
The precise impact of the vaccine request to Huawei and its inclusion in the 5G auction is unclear, but the timing is striking, part of a stark change in Brazil’s stance toward China. The president, his son and the foreign minister abruptly stopped criticizing China, while cabinet officials with inroads to the Chinese, like Mr. Faria, worked furiously to get new vaccine shipments approved. Millions of doses have arrived in recent weeks.
“With the desperation in Latin America for vaccines, this creates a perfect position for the Chinese,” said Evan Ellis, a professor of Latin American studies at the United States Army War College, who specializes on the region’s relationship with China.
Britain and Germany — Huawei has mounted a well-timed charm offensive in Brazil.
said in a message on Twitter announcing the gift.
Before the first vaccines rolled off assembly lines, Huawei seemed to be losing the 5G contest in Brazil, knocked to the sidelines by the Trump administration’s campaign against it. Latin America’s largest nation was only months away from holding an auction to create its 5G network, a sweeping upgrade that will make wireless connections faster and more accessible.
Huawei, along with two European competitors, Nokia and Ericsson, aspired to play a leading role in partnering with local telecommunications companies to build the infrastructure. But the Chinese company needed the green light from Brazilian regulators to take part.
The Trump administration moved aggressively to thwart it. During a visit to Brazil last November, Keith Krach, then the State Department’s top official for economic policy, called Huawei an industry pariah that needed to be locked out of 5G networks.
“The Chinese Communist Party cannot be trusted with our most sensitive data and intellectual property,” he said in a Nov. 11 speech in Brazil, during which he referred to Huawei as “the backbone of the CCP surveillance state.”
Brazil’s foreign ministry said Brazil “supports the principles contained in the Clean Network proposal made by the United States.”
Eduardo Bolsonaro, a son of the president, who headed the foreign affairs committee in the lower house of Congress, said in a tweet that Brazil would back Washington’s push.
China had already faced scorn in some corners of Latin America early in the pandemic, as concerns that it had been careless in allowing the virus to slip beyond its borders took root. Beijing’s reputation took an additional hit in Peru, after exporting cheap, unreliable Covid tests that became an early misstep in the country’s efforts to rein in contagion.
But China found an opportunity to shift the narrative early this year, as its CoronaVac became the cheapest and most accessible inoculation for countries in the developing world.
With the pandemic under control in China, Sinovac, the maker of CoronaVac, began shipping millions of doses abroad, offering free samples to 53 countries and exporting it to 22 nations that placed orders.
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As the first doses of CoronaVac were administered in Latin America, China took a swipe at wealthy nations that were doing little to guarantee prompt access to vaccines in poorer countries.
said in a speech late last month. “We hope that all countries that have the capability will join hands and make due contributions.”
In late February, as the first doses of China’s vaccines were being administered in Brazil, the country’s telecom regulatory agency announced rules for the 5G auction, which is scheduled to take place in July, that do not exclude Huawei.
The change in Brazil reflects how the campaign against Huawei driven by Mr. Trump has lost momentum since his defeat in the November election. Britain said it would not ban equipment made by Huawei from its new high-speed 5G wireless network. Germany has signaled a similar approach to Britain’s.
Thiago de Aragão, a Brasília-based political risk consultant who focuses on China’s relationships in Latin America, said two factors saved Huawei from a humiliating defeat in Brazil. The election of President Biden, who has harshly criticized Brazil’s environmental record, made the Brazilian government unenthusiastic about being in lock step with Washington, he said, and China’s ability to make or break the early phase of Brazil’s vaccination effort made the prospect of angering the Chinese by banning Huawei untenable.
“They were facing certain death by October and November and now they’re back in the game,” Mr. de Aragão said of Huawei.
The request for vaccines by the Brazilian communications minister, Mr. Faria, occurred as it became clear Beijing held the keys to accelerate or throttle the vaccination campaign in Brazil, where more than 270,000 people have died of Covid-19.
Feb. 11, Mr. Faria posted a letter from China’s ambassador to Brazil in which the ambassador noted the request and wrote that “I give this matter great importance.”
In a statement, Huawei did not say it would provide vaccines directly but said the company could help with “communication in an open and transparent manner in a topic involving the two governments.”
China is also the dominant supplier of vaccines in Chile, which has mounted the most aggressive inoculation campaign in Latin America, and it is shipping millions of doses to Mexico, Peru, Colombia, Ecuador and Bolivia.
In a sign of China’s growing leverage, Paraguay, where Covid-19 cases are surging, has struggled to gain access to Chinese vaccines because it is among the few countries in the world that have diplomatic relations with Taiwan, which China considers part of its territory.
In an interview, Paraguay’s foreign minister, Euclides Acevedo, said his country is seeking to negotiate access to CoronaVac through intermediary countries. Then he made an extraordinary overture to China, which has spent years trying to get the last few countries that recognize Taiwan to switch their alliances.
“We would hope the relationship does not end at vaccines, but takes on another dimension in the economic and cultural spheres,” he said. “We must be open to every nation as we seek cooperation and to do so we must have a pragmatic vision.”