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America Online Businesses Communications The Almighty Buck The Internet Verizon

Closing This Summer: Verizon To Scoop Up AOL For $4.4 Billion 153

Posted by timothy from the millions-to-slam dept.
MojoKid writes with this excerpt from Hot Hardware: We learned this weekend that AOL's dial-up business still has over 2 million customers who pay on average just under $21 per month for service. Regardless of how strange that seems to those of us that salivate over the prospects of gigabit Internet, folks are still clinging to 56k modems are adding millions to AOL's bottom line. However, also recall that AOL has a massive digital advertising platform with a heavy focus on the mobile sector and also owns a wealth of popular web destinations including Engadget, TechCrunch, and The Huffington Post. With this in mind, it shouldn't be too surprising that Verizon has offered AOL a marriage proposal. Verizon is acquiring AOL for an estimated $50 per share, which brings the total value of the transaction to $4.4 billion. Here are stories from The New York Times, NBC News, and NPR on the proposed sale, which it's worth noting isn't yet final, and is subject to regulatory approval.
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Closing This Summer: Verizon To Scoop Up AOL For $4.4 Billion More

Closing This Summer: Verizon To Scoop Up AOL For $4.4 Billion

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  • $21 paid to AOL (Score:5, Insightful)

    by Crashmarik ( 635988 ) on Tuesday May 12, 2015 @08:03AM (#49672299)

    $100 for a 56k modem

    Not having to talk to Comcast PRICELESS

    • $100 for a 56K modem

      The USB modem at Amazon.com is $10-$20 and works just fine with your Win 8, Mac or Linux system.

      • Re: (Score:2, Informative)

        by dryeo ( 100693 )

        Not really. Don't know about Mac or Win8 but do know about Win7 and the last couple of Ubuntu releases (it's hard to acquire Linux on dial-up).
        Win7 does handle the USB modem fine but the sharing your connection has changed to sharing your connection with another Win7 computer. No more basic NAT like XP had.
        Ubuntu doesn't even ship with a dial-up client so ideally you have to figure out what deb you need and figure out how to download it. If your knowledgeable and know how to set up PAP secrets, the chat stu

      • Re: (Score:1)

        by Anonymous Coward

        Are you talking about the popular one from Lenovo? If so, you might want to considering buying an old USR Courier. We get better connection rates at work with our Couriers. I work in downtown Seattle, so other than an expensive T1, dial-up is our only option. We share five phone lines between over twenty people so faster connection speeds are critical.

        • Re: (Score:2)

          by dryeo ( 100693 )

          I had a USR Robotics USB Modem that worked as well as my Sportster until a power failure took it out. Now I have a computer with a serial port and an old Sportster.
          I'll note that I once picked up an AOL branded external modem, total piece of crap and would quicky train down to about a 0kb connection. Was lucky to load one page. So in rural areas it is worth getting a good modem.

    • Re:$21 paid to AOL (Score:5, Funny)

      by schlachter ( 862210 ) on Tuesday May 12, 2015 @09:21AM (#49672993)

      Not being ABLE to talk to Comcast...because you're modem is taking up the phone line...PRICELESS?

    • Downloading a copy of Grand Theft Auto V in just a little over 1,030 hours... err... maybe Comcast isn't quite so bad as all that.

  • Though not with AOL. I don't use it often but its simply there as an emergency backup to our unreliable cable broadband service which seems to go down about 1 or 2 days a month with no explanation or apology.

    • Re: (Score:2)

      by SumDog ( 466607 )

      I have a Vivid ViViFi adapter for that. Their an Australian company that uses Wi-Max (Sprint's old 4G protocol; although at a different frequency so you can't use old Sprint hardware). You can pay when connecting if you need some emergency GB when your Internet goes down. In the US, I just use to tether via Sprint (I had an unlimited plan, but that was 3 years ago so I'm pretty sure that plan is gone now).

    • My DSL provider actually provides free dialup with every account, for emergencies and/or if you're on the road and just need to check your mail or something. I didn't even know about it until I saw a mention of it in some obscure corner of their website. Tried it for a laugh and hey, it worked! :P

  • Ah ... AOL .. so overrated ... (Score:3)

    by gstoddart ( 321705 ) on Tuesday May 12, 2015 @08:05AM (#49672315) Homepage

    Yeah, this is the same AOL who 'bought' Time Warner when they were massively overly valued in the dot com silliness, using over-inflated funny-money stocks.

    Time Warner couldn't puke them out fast enough to get them off their back, because AOL was so grossly inflated in value it wasn't funny.

    I sincerely hope from what I've heard of Verizon that they choke on AOL like Time Warner did.

    Honestly, is AOL worth $4.4 billion? Someone better be doing some proper due diligence on this one.

    • Re:Ah ... AOL .. so overrated ... (Score:5, Informative)

      by phantomfive ( 622387 ) on Tuesday May 12, 2015 @08:16AM (#49672419) Journal

      Honestly, is AOL worth $4.4 billion? Someone better be doing some proper due diligence on this one.

      With annual revenue of $2.5 billion [google.com], probably. Seriously, this is something you could have checked out.

      After dialup disappeared, AOL had plenty of cash in the bank. So they became a type of venture capital. They bought Huffington Post, Tech Crunch and many others. Since they actually have a lot of web traffic, they started an advertising business.

      If you consider that Google and Facebook are essentially ad companies, with ad networks that span far beyond their own website, AOL is another one. Any time you see a video ad on the internet, there's a decent chance it's from AOL (but please use adblock, malware gets into those things).

      • Honestly, after AOL purchased Time Warner for $160 billion or so of what everybody knew at the time was grossly overrated stock, AOL is not an entity I've kept tabs on.

        At the time that was happening everybody was like "wait, Time Warner has publishing, TV, print media, movies, and AOL has ... email?".

        Which means an awful lot of people were shaking their heads and thinking some executives had lost their mind, and that AOL had pulled off a massive scam .. which Time Warner came to realize.

        Well, if AOL is an a

        • Re:Ah ... AOL .. so overrated ... (Score:4, Informative)

          by phantomfive ( 622387 ) on Tuesday May 12, 2015 @08:29AM (#49672517) Journal

          Honestly, after AOL purchased Time Warner for $160 billion or so of what everybody knew at the time was grossly overrated stock, AOL is not an entity I've kept tabs on.

          Google finance is your friend. Any time you want to know if a company is worth their stock price, check out their revenue and profits.

        • At the time that was happening everybody was like "wait, Time Warner has publishing, TV, print media, movies, and AOL has ... email?".

          At the time, I was thinking AOL only thinks of the Internet as "content" rather than a global interconnected network. And it's become even more true today to the average consumer. Buying a content company is a lot more logical than you would think - but they were a bit early, considering they had dial-up to work with.

          • Re:Ah ... AOL .. so overrated ... (Score:4, Insightful)

            by iamgnat ( 1015755 ) on Tuesday May 12, 2015 @10:21AM (#49673441)

            At the time that was happening everybody was like "wait, Time Warner has publishing, TV, print media, movies, and AOL has ... email?".

            At the time, I was thinking AOL only thinks of the Internet as "content" rather than a global interconnected network. And it's become even more true today to the average consumer. Buying a content company is a lot more logical than you would think - but they were a bit early, considering they had dial-up to work with.

            I was an employee at the time and you partially hit the nail on the head there.

            Steve Case was by far the best CEO I've ever worked under. Both naturally charismatic and a strong long term vision. As far back as the Q-Link days he never wanted to be a service provider or a technology company. He wanted to create a new medium for people to get their content and us buying TW was supposed to be the realization of that idea.

            Unfortunately Steve had no idea what he was getting into going up against the entrenched old media execs and his allowing them to retain some control was AOL's undoing.

            At the time of the purchase teams at AOL had developed working POCs for streaming music and video delivery that worked with minimal buffering at 19.2k while retaining good quality (of course that was before HD took off). What Apple did with the iTunes store we had done long before. All we needed was the keys to the TW media kingdom and the digital media landscape would have looked a lot different. We all know what old-media thinks about digital content though...

            Steve's last misguided act in the saga was to sacrifice himself to get Ted Turner out, but there was no one that ever replaced Steve's drive and passion and TW took more and more control.

            Contrary to gstoddart's uneducated understanding of things, AOL was the only profitable (mostly due to the dialup income) portion of TW after history had been re-written. TW bled the money out and into other money pits until there was nothing left and they finally let AOL go.

            AOL always got a bad rap and many of my co-workers were afraid to admit they worked there. It was a good company that filled it's role very well. It was never a service meant for those with technical ability. It was meant for those that barely wanted to know what a computer was and it served them very well. It saddens me still how things turned out and that they've fallen into typical flailing around that many companies seem to do these days when trying to chase short term profits.

            • The AOL/TW merger was too little, too erly. It was too little in that AOL didn't take enough control of TW. It was too early in that traditional media didn't start dying until long after Case left. Once traditional media began its slow but inevitable decline, Case could've finally taken the reins over and mandated the switch to internet-based media distribution. But by then, it was too late. The TW folks had taken back control of the board and it was all downhill from there. Specifically, I should say the W

              • It was too early in that traditional media didn't start dying until long after Case left. Once traditional media began its slow but inevitable decline, Case could've finally taken the reins over and mandated the switch to internet-based media distribution.

                I don't think so, just look at how they are still fighting it while the rest of the world now knows that the "war" is over and digital media won. Rather than embrace it and figure out how to improve their customer's lives with a quality product, they instead continue to invest in DRM schemes that are broken almost as fast as they are released and try to demand that people pay to use content that they have already paid for in another format.

                You are right about allowing them too much control though. Up until

          • Re: (Score:2)

            by ubrgeek ( 679399 )
            The deal, done over the weekend by staff sequestered in two floors of an office building, was seen by those of us at TW as being no different than the Excite@Home merger. TW's Road Runner service would have access to more content than had previously been available via TW's Pathfinder service (when we were even allowed access to that stuff.) Myself and a few others pushed and pushed for Road Runner to make a deal with AOL for their content and were repeatedly told it would never happen. So instead we created

            • One example was when RR - the cable modem business - temporarily risked losing the "right" to use the cartoon character's likeness because the other part of TW that controls cartoons (Warner Bros? Don't remember) didn't like that we were doing things like using "Beep! Beep!" in our ads ... the official, trademarked term is "Meep! Beep!"

              A little crazy, considering Beep Beep [wikipedia.org] is literally a title of one of the cartoons.

              But as far as I can tell, they don't have anything registered as a trademark. While the sound is closer to "Meep Meep" I've only ever seen it written as "Beep Beep" even in the cartoons themselves.

        • Re: (Score:3)

          by gfxguy ( 98788 )
          Yup... I work for Turner Broadcasting, which was bought shortly after I started by Time Warner, which was bought shortly after that by AOL. I was really in disbelief at the time... AOL had no appreciative assets - they had computer infrastructure, and we all know how fast computer hardware depreciates - and they had customers. And that's it. Depreciating hardware and customer numbers that were already dropping like a rock. They tried to make us all use AOL software, but there was too much push-back. Af

      • After dialup disappeared, AOL had plenty of cash in the bank. So they became a type of venture capital. They bought Huffington Post, Tech Crunch and many others. Since they actually have a lot of web traffic, they started an advertising business.

        Thank you for this explanation. I was really struggling to understand why Verizon would want to pay so much for the dial up business but clearly they want everything else and are just taking the dial up business as part of a complete package, not specifically trying to get that.

      • I always thought the model for the value of a company was 1x revenue or 10x net, with consideration for where it was expected to be in the future.

        If I'm right (I may not be) , it's over valued, though I may be under estimating growth potential.

        • I always thought the model for the value of a company was 1x revenue or 10x net, with consideration for where it was expected to be in the future.

          That sounds reasonable, though right now returns are depressed so a lot of people are willing to put up with 13x net in a low-growth stock.

      • Re: (Score:2)

        by quenda ( 644621 )

        With annual revenue of $2.5 billion [google.com], probably.

        That page shows net income of $120m in the last year, so a P/E over 36, or 2.7% yield. Must be a growth stock.

  • An "AOL Time Warner company" .. oh everything old is new again!! :)

  • Crappy service (Score:3)

    by jfdavis668 ( 1414919 ) on Tuesday May 12, 2015 @08:09AM (#49672353)
    Great! Now I can have dial-up and crappy service rolled into one!

  • And is still worth *$4 BILLION* apparently.

  • The first salvo against Net Neutrality? (Score:2, Insightful)

    by Anonymous Coward

    Net Neutrality rules require carriers to treat everyone's content like everyone else's - you can't throttle or restrict traffic based on who it comes from or where it's going.

    However, as I read them, the rules are less clear on what content PROVIDERS can do with their own content. And Verizon just bought (primarily) a bunch of content.

    I can't charge extra to carry certain content? Fine. Now I buy the content, and change how it's delivered. I have "Huffington Post Free Edition," with limitations on speed

    • I predict we'll see a lot more of these vertical mergers of content providers and networks, and there will be an increasing wave of "subscribers only" offers in the near future.

      None will benefit the consumer.

    • You just made the case for what I have been proposing for a long long time. The problem isn't a network problem, it is a captive last mile customer base problem. Change that dynamic (last mile) and you change the world.

      Each Municipality should build out its own last mile infrastructure to a COLO facilty and then companies like Comcast, Netflix and Time-Warner can find creative ways of providing services the customer (us) actually want. As long as the BIGTELCO companies have a captive audience, then we (the

      • Re: (Score:2)

        by Blrfl ( 46596 )

        You sound a lot like me in 1998.

        I doubt this will happen any time soon, but it really is going to be the way to go. The same model worked great for long-distance service.

        • The Beauty of my solution is that it would simply take one municipality to pull this off, and make it work. Even if the big Cable/Telco companies didn't want to play, smaller more nimble companies would swoop in and provide new and interesting offerings. Unlike my current provider of content, which insists that a few dozen Shopping channels might be enough.

      • Some of us enjoy not living in a 'municipality'.

    • I predict HuffPo will tell us how awesome that is, too.

  • Are they actually dialing up... (Score:1)

    by Anonymous Coward

    ...or are they attached to their email address? I have "dial-up" through Earthlink, but only to keep the email address alive.

    • Re: (Score:2)

      by Aereus ( 1042228 )
      I finally got my dad to stop paying full price for his dialup account almost 15 years after he got cable internet. He now pays $3/mo through the same provider for just a "business email account" that forwards his old address (which was his sticking point). And the kicker—they had long since given up on updating the old email service, so it still only had 25 MEGABYTES of storage space. The new account has like 10GB and is probably ran through the Gmail backend. He still couldn't tell the difference whe

    • AOL will allow one to convert a paid account to a free one when one cancels --- one keeps all one's old e-mail addresses, and they've increased the number of free ones allowed per account so one doesn't have to delete any.

      I had a paid dial-up for a long, long while and would probably still have it if they hadn't cancelled the members.aol.com webhosting --- if they'd charged for that separately and maintained it, I'd still have it.

      • I think I still have a free account. I vaguely remember them talking me into it back when I got broadband at the turn of the century. I don't remember what my username was.

  • AOL? (Score:4, Funny)

    by Lunix Nutcase ( 1092239 ) on Tuesday May 12, 2015 @08:16AM (#49672417)

    Lucky for Verizon, AOL's 56k isn't that much slower than their supposed "broadband" DSL.

    • Re:AOL? (Score:4, Interesting)

      by omnichad ( 1198475 ) on Tuesday May 12, 2015 @08:41AM (#49672643) Homepage

      Verizon is rolling backwards in technology. First, they stopped rolling out new FiOS. Then, they forced their remaining customers onto Uverse with a flawed modem [ron-berman.com]. Now, they're giving up and rolling all the way back to dial-up. Probably gaining mostly customers who chose AOL so they wouldn't have to deal with Verizon.

      Seriously, the NVG510 modem they rolled out for Uverse has a flaw that blocks the Internet from working for hours or days at a time and redirects all web traffic to an error page. There is a workaround involving rooting the modem and changing some settings and DNS servers, but the only firmware updates Verizon has put out are to block people from rooting the modem.

      • Re: (Score:2)

        by radish ( 98371 )

        Huh? U-Verse is AT&T, not Verizon. I'm a Fios customer and I'm....still a Fios customer?

        • Oops...yeah...I have no idea why I lumped AT&T in there. If you're already a FiOS customer you get to keep your FiOS. They aren't running any new fiber (since 2010!!). It's done.

          AT&T is really just the T-1000 of the telecom industry (wish I could link to Stephen Colbert's 2007 video but here is the general idea - http://consumerist.com/2011/03... [consumerist.com])

          You have to ask yourself how I got the facts that wrong and still got modded so high.

          • Re: (Score:2)

            by radish ( 98371 )

            They're still rolling out in NYC as of at least last year (link [fiercetelecom.com]) but they're certainly not expanding to new areas. It's sad, great service despite the company providing it!

  • Does AOL still exist ?? WTF ?

  • Can you hear me now? (Score:5, Funny)

    by jfdavis668 ( 1414919 ) on Tuesday May 12, 2015 @08:36AM (#49672603)
    Pshhhkkkkkkrrrrkakingkakingkakingtshchchchchchchchcch...

  • not all dialups accounts are in use (Score:1)

    by Anonymous Coward

    Some number of those accounts are because people don't want to change their email address. To them it's like changing a phone number that they have had for 20 years - so they pay.

    I am not sure how that breaks down - but I do believe that 5 or so years ago, the AOL dialup business was at 30-40 million subscribers.

    • THIS. And this is why I 've never used any of the email address my ISPs gave me over time. Sure, there is some way to cancel the service and still have emails sent to the old address forwarded, but if I can't bother enough to find out how it's done, novice users won't either. I am not from the US, so I don't know if there are places that have telephone (PSTN) but can't have DSL because they are too far away from the closest DSLAM.

  • Will you abandon AOL-hosted sites? (Score:4, Informative)

    by david.emery ( 127135 ) on Tuesday May 12, 2015 @09:14AM (#49672931)

    Given my great distrust of Verizon, I'm seriously considering abandoning/boycotting any site currently hosted by AOL, such as "Engadget, TechCrunch, and The Huffington Post."

  • Verizon Leadership (Score:3, Insightful)

    by GateGuy ( 973596 ) on Tuesday May 12, 2015 @09:42AM (#49673153) Journal

    I can not understand the leadership at Verizon. They seem to always do the opposite of what they should do.

    For example, when the iPhone first came out, Verizon turned Apple down and lost quite a few subscribers to ATT. I wonder if the executive that made that decision kept his job?

    More examples:
    Red Box deal
    Intel TV assets
    and now AOL

    There never appears to be a coherent thought process. The layoff thousands 3 weeks ago, going to lay off a lot more on May 22nd, yet there is money to waste on AOL. Funny thing is, I will probably be laid off after this year's contract negotiations are over, but my son will start working for Vz in June.

    I bet they bag Wireline with the load debt so that Wireless books look great.

  • Just great... (Score:3)

    by sconeu ( 64226 ) on Tuesday May 12, 2015 @10:33AM (#49673577) Homepage Journal

    If you thought cancelling your AOL account was difficult before...

    Now you get to deal with the Verizon Customer Retention Specialists!!!!!!

    • Hey, if you can get a Verizon rep to promise FiOS to some of the places where they're still using AOL dial-up, that would be an amazing deal.

  • Good thing AOL pissed away $100 billion dollars [latimes.com] a few years ago, otherwise Verizon wouldn't have been able to buy them now.

    Of course they were never really worth that $100 billion, but it must have been fun pretending they were.

  • There's still probably some substantial revenue coming in from forgotten AOL subscriptions from elderly folks who thought they needed it to access the internet, but probably not 4.4B worth.

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