Friday, May 15, 2015

1486 vArizOL

At least they’re not calling it a merger.  Verizon is buying America On Line, AOL, for $4.4 (B) Billion.  Well at least that’s the advertised price.  But it doesn’t include sales tax, federal fees, FCC usage, local fees, company surcharges, federal and state surcharges.

Like your bargain phone plan… the one they advertised for $80 a month, but actually costs you $125.  Revenge is sweet.

Verizon has a case of Comcast envy.  If a common carrier can buy a major broadcast network, then why not a major senior citizen of a web company.

Vertically integrated media and communications companies are nothing new. RCA was among the originals.  Its goal was to make or own everything between the live performer and the live listener.  

Hence it made transmitters, microphones, cameras, radios, record players, TV sets. And it owned NBC whose programs all that stuff carried.

(It also made missile guidance systems, presumably so that if you tuned to CBS, they could bomb your house.)

Verizon wants the whole of AOL.  Arianna Huffington may think otherwise.  After selling her web-based news aggregation site to AOL for $300 million, she tried to buy it back and failed.  The Huffington Post is now worth about $1 billion by some estimates, or almost a quarter of the bill AOL will send to Verizon.

It’s lost on them that when HuffPost sold, an awful lot of the worker bees and much of the brain trust moved on to Buzzfeed.

AOL at its peak was the joke of the internet.  But it helped turn the busy signal into a secondary national anthem.  It was the biggest air pocket in the tech bubble.

Then it bought Time Warner and started demolition,  stopped sending free trial discs by the millions and got serious about being what we now call a “content provider” and a messaging service.

Verizon’s main telephone competitor, AT&T wants to buy the satellite TV provider DirectTV.  The satellite service Dish Network offers internet service from the sky.  So Verizon must think it’ll be left holding an empty bag if it doesn’t do, well, something.

The real winners in these consolidations are the lawyers and bankers.  Even mighty telephone companies find it hard to dip into savings and come up with four billion otherwise untargeted dollars.  And deals like these don’t get done on a handshake.

The customers sometimes win, too.  But not often. Has anyone noticed that at $4.4 billion, AOL is overvalued?  That there’s little chance Verizon will recoup its investment during the lifetime of anyone now old enough to read this story?

Makes you long for the good old days of the ever-present busy signal.

Shrapnel:
--In hoity toity salons of Very Serious Journalism, NBC is taking a lot of flak for having Lester Holt anchor Nightly News from a helicopter above the Philadelphia train wreck of a train wreck.  But part of the job of journalism sometimes includes pull your eyes toward the story. And sometimes it takes a bold move that leaves viewers saying “hey, did-ja see THAT?”

I’m Wes Richards. My opinions are my own but you’re welcome to them. ®
Please address comments to wesrichards@gmail.com

© WJR 2015

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