Washington - Verizon closed its $4.48 billion purchase of Yahoo's core
business, finalizing a deal mired by two massive hacks affecting more
than 1 billion Yahoo accounts and marking the latest play by telecoms to
challenge Silicon Valley's dominance in online
advertising.
Under a newly bolstered Verizon, Yahoo and AOL will combine
as part of a new media and technology company called Oath. The sale of Yahoo
was first announced last summer, with a $4.8 billion price tag. But just months
later, the company disclosed a series of data breaches that compromised the
personal information of potentially hundreds of millions of people. Following
the breaches, Yahoo and Verizon eventually agreed to discount the purchase
price by $350 million.
As part of the finalized deal, Yahoo chief executive Marissa
Mayer will resign with a "golden parachute" worth just over $23
million, in cash, equity and benefits, according to an SEC filing. She served
at the company's helm since 2012.
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And more than 2 000 employees will get laid off as Yahoo and
AOL reorganize under Verizon's management, according to a person familiar with
the matter.
Once the portal to the internet and a pillar of the
technology industry, Yahoo has fallen in stature as other web giants, chiefly
Google and Facebook, have built sprawling business empires and amassed cultural
cachet extending well beyond Southern California.
While no longer seen as the pioneering Internet company it
once was, Yahoo's umbrella of websites, which includes Yahoo Finance and Yahoo
Sports, commands a staggering amount of online traffic.
Yahoo's Internet properties had nearly 200 million unique
visitors in April, according to the analytics firm comScore. Only Facebook and
Google claimed more. Experts said it's this massive audience that attracted
Verizon to Yahoo.
"Verizon stands to expand their audiences
significantly," said Susan Bidel, a senior analyst at Forrester Research.
Bidel said that Verizon is positioning Oath as a platform for advertisers that
connects them with large audiences and provides targeted information about the
kinds of people they are reaching.
Verizon's purchase of Yahoo also continues its play for
original online media. Through its $4.4 billion acquisition of AOL in 2015,
Verizon owns the Huffington Post and TechCrunch.
Folding in Yahoo's sites both expands the reach Verizon can
offer advertisers and amplifies the company's ability to tailor ads to specific
users.
Like AT&T's bid to purchase Time Warner, Verizon's move
also reflects a trend in the telecom industry for companies to wed their
networking technology to exclusive content.
"They want to have greater ownership to avoid the
ultimate fear of being commodities, of being this dumb pipe," said Walt
Piecyk, a telecom analyst at BTIG. Armed with unique data about the browsing behaviour
of internet users, companies like Verizon and AT&T can also use that
information to shape the formats of websites and videos, and serve more
effective, pinpointed ads, he said.
Tim Armstrong, the former chief executive of AOL will now
lead Oath. "Now that the deal is closed, we are excited to set our focus
on being the best company for consumer media, and the best partner to our
advertising, content and publisher partners," he said.
WASHINGTON POST