Verizon CEO Rejects Rumors Of AOL Bid

Is Verizon seriously considering a bid for AOL? Not according to Verizon CEO Lowell McAdam.

“To say we are having significant acquisition discussions [with AOL] is not accurate,” McAdam told attendees of Citi’s Global Internet, Media & Telecommunications conference on Tuesday.

Leaving the door open for future deals, McAdam did say: "I think AOL, along with lots of other media companies, are potential for us to do partnering.”

That, however, is a far cry from a report in Bloomberg on Monday that Verizon has directly engaged AOL in acquisition talks.

Despite McAdam’s claims to the contrary, some analysts believe that a Verizon-AOL deal is indeed in the works. “The company approached AOL … about a potential acquisition or joint venture,” IBISWorld analyst Sarah Kahn insisted in a research note  released on Tuesday afternoon.



Explaining the would-be deal, Kahn suggested that Verizon wants AOL — and its ad technology in particular — to stand out in a highly competitive wireless communications sector.

“Verizon is attempting to distinguish itself from its competitors,” according to Kahn. “With the wireless service market becoming increasingly saturated, the telecommunication giants can no longer rely on new subscribers to stimulate revenue growth.”

“AOL’s networks segment, offering advertising technology products and services ... is well positioned to address the cross-screen digital media advertising trends,” Kahn added. “Verizon Wireless, with more than a third of the wireless telecommunication carriers industry’s revenue, would expand its mobile-video offerings and use AOL’s advertising technology to retain its customers and attract new ones from its competitors.”

How a merger would benefit AOL is less clear, while the Web giant’s disastrous Time Warner merger will surely weigh on any related discussions.

Thanks to shrewd investments in programmatic advertising technology and the steady hand of CEO Tim Armstrong, AOL has recently experienced an enviable resurgence. AOL once again beat Wall Street’s revenue estimates for the third quarter of the year. Year-over-year, the Web giant saw total revenue rise 12% year-over-year, which it attributed to strong growth in global advertising.

Specifically, global advertising and other revenue grew 18% year-over-year, driven primarily by 44% growth in third-party platform revenue, the sale of premium formats and inclusion of revenue from for a full quarter in 2014, versus approximately one month in 2013.

Doubling down on its ad technology focus, AOL recently named programmatic veteran Allie Kline as its new chief marketing officer.

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