With Verizon Deal, Yahoo and AOL Are Finally Together

Rival web pioneers are now corporate siblings

Yahoo's long, winding and rocky road has finally come to its conclusion.

Verizon announced this morning that it has acquired Yahoo's operating business for roughly $4.83 billion, which had long been expected ever since Yahoo put its core business up for sale. The deal, which is subject to usual regulatory and shareholder approvals, is expected to close early next year. When it does, it will finally wed Yahoo with AOL, which Verizon bought last year.

"Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers," said Verizon chairman and CEO Lowell McAdam, in announcing the deal. "The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising."

The drumbeat for a merger between the two has sounded for years. In 2014, AOL CEO Tim Armstrong made overtures to Yahoo chief Marissa Mayer about a possible merger, which she rebuffed. But now, thanks to Verizon, two of the internet's earliest pioneers are finally corporate siblings, and could make Verizon a formidable foe as it attempts to compete for ad dollars with Google and Facebook.

The merger combines Yahoo's audience—the web company said it counts 1 billion monthly active users, including 600 million on mobile—with AOL's digital properties like The Huffington Post, TechCrunch and Engadget. Yahoo, even though it shuttered Yahoo Screen and most of its content verticals, still boasts the highly trafficked Yahoo Sports and Finance verticals. Yahoo also has millennial-reaching Tumblr, which could see a revival under AOL, and subsequently, Verizon.

"As one of the largest wireless and cable companies in the world, Verizon opens the door to extensive distribution opportunities," Mayer wrote in a blog post on Tumblr. "With more than 100 million wireless customers, a shared view of the importance of mobile and video ad tech, a deep content focus through AOL, Verizon brings clear synergies to the table."

In the sports world, Yahoo could also give Verizon a boost for its go90 mobile platform. Last year Verizon cut a deal with the NBA to offer access to live out-of-market games on go90 through its broadband NBA League Pass offering; Verizon is a major sponsor for the league. Yahoo, led by its NBA reporter Adrian Wojnarowski, launched an NBA-only site, The Vertical, which has already made headway in competing with sports behemoths ESPN. Yahoo also has agreements with the NHL and MLB to offer free out-of-market games—which it sells its own advertising for—and rights to some PGA golf events.

Go90 also has access to NFL games thanks to Verizon's existing mobile rights deal with the NFL, which is set to expire next year. In 2015, Yahoo became the first to broadcast an NFL game completely over the internet.

During an appearance on CNBC's Squawk on the Street this morning, Mayer was asked whether a Verizon-Yahoo-AOL combination could lead to them bidding on international rights for the NFL.

"We haven't designed some of the integrations, but these are some of the opportunities we think are exciting," she said. "In terms of the overall scale and reach that we bring to the business, I think it would be possible to go after more and more valuable content and licensing rights."

With most TV rights locked up throughout the next decade—ESPN re-upped its deal with the NCAA's ACC conference through 2036 last week—sports leagues have begun to look toward livestreaming pacts with digital companies. The combination of AOL, Verizon and Yahoo's livestreaming rights could help Verizon maintain its foothold in that arena, especially with Twitter making a massive push by cutting content deals with the NBA, MLB and NHL; this fall, Twitter will stream 10 Thursday Night Football games.

So while it may have taken a third-party to bring the two of the web's first companies together, the marriage between AOL and Yahoo should be a benefit to both.