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Verizon Considers Taking Over AOL To Expand The Carrier’s Mobile Clout

CREDIT: AP PHOTO/JOHN MINCHILLO
CREDIT: AP PHOTO/JOHN MINCHILLO

The nation’s top wireless carrier is looking to buy AOL, Inc. as either an outright takeover or in a joint partnership to beef up the company’s mobile media capabilities.

Verizon made an informal offer to buy AOL primarily for its advertising technology that automatically buys and sells ads online, Bloomberg reported Tuesday. And while an official deal isn’t likely to materialize soon, Verizon stands to gain more than an ad advantage from merging with or acquiring AOL.

AOL has over 2 million paid dial-up internet subscribers and owns several online media outlets that garner nearly 200 million unique monthly visitors. Verizon has been ramping up efforts to gain footing in online content, advertising and mobile video space.

The broadband carrier recently shuttered its controversial tech news site Sugarstring following criticism of the site’s refusal to cover stories on net neutrality or government surveillance. An AOL takeover would fill that void for Verizon, replacing its failed site with the Huffington Post and tech news sites TechCrunch and Engadget.

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There’s been an uptick in big media mergers in recent years. A landmark deal between AT&T; and DirecTV has been in the works for months alongside Time Warner Cable’s merger with Comcast. Both deals worth over $93 billion combined have been stymied by the U.S. Federal Communications Commission (FCC), which imposed an 180-day halt on the agreements in November so the agency could determine how beneficial the deals are to the public interest. Sprint and T-Mobile tanked a merger deal last year that would have created serious competition for top wireless providers Verizon and AT&T.;

Media mergers have been happening for decades, but they tend to make customers nervous, shrinking their options for cable, Internet or phone providers. Analysts warn such partnerships create more hostile market conditions that only include a few major players, making it increasingly difficult for consumers to find services at affordable prices.

Fewer providers often means companies have little incentive to invest in better infrastructure or lower prices. Americans have borne the cost of this problem, paying more for television and internet access while receiving services with slower speeds than other countries.

But more deals like between Verizon and AOL are expected to emerge as telecommunications companies swallow up one another to become veritable media conglomerates.