Verizon Communications Inc. has inked a $5 billion deal to sell its media group, which includes major online properties such as Yahoo Finance, to private equity firm Apollo Global Management. 

The sale was announced this morning. Under the terms of the transaction, Verizon is set to receive $4.25 billion in cash along with a 10% stake in the new company that Apollo intends to form from the media assets changing hands. 

Verizon’s media business mostly comprises assets that the company obtained through its purchase of AOL in 2015 and Yahoo in 2017. Through the AOL deal, Verizon acquired major digital publications such as HuffPost, TechCrunch and Engadget, along with a sizable programmatic advertising business that helps brands purchase online ad real-estate. The Yahoo acquisition, in turn, bought the carrier control of the fourth most visited internet property globally.

The $5 billion for which Verizon will be selling its media assets is significantly less than what it paid to buy them. Combined, the AOL and Yahoo acquisitions cost the carrier about $9 billion.

The timing of the deal may have to do with the fact that the business’ revenue growth has picked up over the last few months. The fourth quarter of Verizon’s 2020 fiscal year marked the first time since the 2017 Yahoo acquisition that the media group saw its sales increase: Revenue rose 11.4% year-over-year, to $2.3 billion. The momentum continued into this year, with the group having boosted revenues by 10.4% in the first quarter.

“Verizon Media has done an incredible job turning the business around over the past two and a half years and the growth potential is enormous,” said Verizon Chief Executive Officer Hans Vestberg (pictured). “The next iteration requires full investment and the right resources. During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media.”

For Verizon, the deal comes at a time when it’s spending tens of billions of dollars on upgrading its wireless networking to the latest 5G connectivity standard. Earlier this year, the U.S. Federal Communications Commission disclosed that Verizon had purchased 5G spectrum rights worth a combined $45.5 billion. Verizon, like its competitors, is also making major investments in equipment upgrades while at the same time developing new edge computing products for enterprises.

The extra capital from the sale of the media group may help advance the carrier’s infrastructure initiatives.  

Guru Gowrappan, the media group’s CEO, will continue to lead the business after the ownership change. The sale is set to close in the second half of the year, after which Apollo plans to rename the group from Verizon Media to Yahoo.

Photo: Verizon