Verizon the 'clear favorite' to win Yahoo's online assets

Verizon is the "clear favorite" to walk away with Yahoo's valuable online business, according to Reuters, as the nation's largest wireless carrier increasingly focuses on expanding its fledgling media operations.

Verizon acquired AOL last year for $4.4 billion in a deal that included properties such as Engadget, The Huffington Post and TechCrunch. And while "it is not yet clear how well the unit is performing financially," as Reuters reported, the leadership of AOL CEO Tim Armstrong has encouraged the operator to expand its online content and services business.

Bloomberg reported last week that Verizon intended to bid for Yahoo's web business in a round of negotiations scheduled to begin last Monday. The carrier is said to be working with at least three financial advisors on the effort, signaling its seriousness.

Verizon executives have spoken publicly about their interest in Yahoo. Other potential bidders include Sprint's parent SoftBank, Time, and several private equity firms; AT&T has reportedly dropped out of the running.

Armstrong was reportedly charged with researching a possible bid, and Verizon may be willing to take Yahoo's 35.5 percent stake in Yahoo Japan as part of the deal. That stake is worth roughly $8.5 billion, and Verizon would presumably either give it to shareholders or spin it off.

Yahoo has undeniably struggled to monetize its online assets, but they appear to be a good fit for Verizon. The operator's subscriber base provides a massive distribution channel in the U.S. that can be used immediately, and it can integrate Yahoo's properties with its Go90 video offering. And Yahoo's high-profile brand and large audience expands Verizon's opportunities to ramp up its OTT efforts.

But while an acquisition may look good on paper, whether Verizon could capitalize on Yahoo's assets is another matter. Mobile network operators in the U.S. have historically failed to monetize apps and content effectively, leaving them largely on the sidelines as Apple and Google built empires based on their respective operating systems.

For more:
- see this Reuters report

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