According to “a person close to the matter,” Verizon Communications is set to announce its acquisition plan for Yahoo’s core business tomorrow (Monday, July 25th 2016) for $4.8 billion. Verizon, America’s largest cellular carrier by subscriber numbers, has been linked with the purchase of Yahoo for some months now and this story has attracted plenty of interest and comment. This has included T-Mobile’s Chief Executive Officer claiming that Verizon will announce something stupid, through a recent rumor of Yahoo accepting Verizon’s bid.
Yahoo originally put their core business up for sale in February 2016 after years of struggling and received at least ten bids. In April, Yahoo and activist investor, Starboard, agreed to work together to smooth the sale of Yahoo to another company in order to maximize the amount received – Yahoo conceded a number of board seats to Starboard. In exchange, Starboard agreed not to force a proxy vote that could potentially fire the Chief Executive mid-way through the delicate business sale negotiations, which might have added months to the Yahoo business sale. As for the details to the expected announcement, Yahoo is believed to be retaining its stake in the Alibaba Group, Yahoo Japan and patents, but everything else including the real estate will be sold on to Verizon. It is unclear what the future of Yahoo’s embattled Chief Executive, Marissa Mayer, will be. Neither Verizon nor Yahoo were prepared to comment on the story, but any official announcement is expected to break before the market opens and this happens in a small number of hours.
Should Yahoo be bought by Verizon, this will boost Verizon’s digital publishing divisions, which currently includes the Go90 video platform and of course AOL, which Verizon has recently purchased. This will give the communications company a significant means of producing content to sell on or provide to subscribers as a means to keep people interested. However, Verizon’s trouble is that many customers are not especially interested in exclusive media content and instead would rather their carrier provides them with a reliable, secure, fast and inexpensive service. Verizon is choosing a different path to competitor network, T-Mobile US, which is offering unlimited music and video via selected streaming services to customers. This gives customers much more choice and T-Mobile are merely the delivery mechanism for content, rather than the provider.