Verizon-AOL Merger Makes No Sense

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Verizon Communications plans to buy AOL for $4.4 billion, according to a report in Tuesday’s Wall Street Journal. The deal is the telecom giant’s latest bid to expand its business to include mobile video and advertising services. If finalized, Verizon would also take control of AOL’s online news sites, including Engadget, The Huffington Post and TechCrunch.

Free Press Research Director S. Derek Turner made the following statement:

“Verizon’s bid for AOL is yet another example of how Wall Street’s short-term mindset shortchanges competition and investment. For the price it’s paying for AOL, Verizon could deploy its FiOS broadband service across the rest of its service area, bringing much-needed services and competition to communities like Baltimore, Boston and Buffalo. Instead, the company is spending a fortune to wade into the advertising and content-production markets. In terms of the latter, Verizon has already shown a willingness to block content and skew news coverage.

“It’s hard to see how this transaction is good for anyone but a few brokers and lawyers. For Verizon customers and shareholders, it’s just a tremendous waste of resources the company should instead use to build lasting – and profitable – broadband infrastructure.”


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