Verizon Said to Enlist AOL CEO Armstrong to Explore Yahoo Deal

No Formal Offer Yet, But Verizon CEO Favors 'Marrying' Assets

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AOL CEO Tim Armstrong speaks at an event in 2014.
AOL CEO Tim Armstrong speaks at an event in 2014. Credit: Jason Alden/Bloomberg

Verizon Communications has given Tim Armstrong, CEO of its AOL unit, a leading role in exploring a possible bid for Yahoo assets, according to a person with knowledge of the situation.

Late last week, and as far back as December, Verizon has said "yes" when asked whether it was interested in purchasing some or all of the struggling company.

The largest U.S. phone carrier hasn't hired bankers to conduct an offer and there have been no formal talks, according to the person, who asked not to be identified because Verizon's plans haven't been made public. Still, as Yahoo sorts out its strategy, Mr. Armstrong is taking a lead in preliminary discussions, the person said.

Verizon is looking to make its go90 streaming video service a source of new sales and profit. Yahoo, with more than 1 billion people using its e-mail, finance, sports and video sites, represents a prized asset to combine with AOL's 2 million users and Verizon's more than 112 million wireless subscribers. That kind of web traffic, along with exclusive content, is just what Verizon needs to secure a foothold in video advertising against YouTube and Facebook serving a mobile phone-addicted generation.

Yahoo and Verizon declined to comment.

Long-Time Ties
Mr. Armstrong's outreach picks up on conversations he had in 2014 with Yahoo CEO Marissa Mayer at the Allen & Co. media conference in Sun Valley, Idaho, according to another person familiar with the situation. This was a year before Verizon acquired AOL and when Mr. Armstrong was exploring a deal to combine the two former web portal giants. He has known Ms. Mayer for years. Both were executives at Google before they left to head up their respective web companies.

Mr. Armstrong helped with Verizon's $250 million purchase of advertising technology specialist Millennial Media in October. AOL, while it was still independent, had already begun talks with that company.

With the blessing of Verizon CEO Lowell McAdam, Mr. Armstrong runs AOL as a semi-autonomous media and advertising business. A former U.S. sales chief for Google, Mr. Armstrong serves as a talent scout and dealmaker, helping Verizon develop its mobile video business to compete with Google and Facebook.

For the better part of a decade, Yahoo has struggled through leadership changes, failures to gain a foothold in rising trends like mobile, an inability to dispose of valuable stakes in Alibaba Group Holding and Yahoo Japan Corp. without heavy tax costs, and now faces calls for an outright sale by activist shareholder Starboard Value.

Verizon's Mr. McAdam has taken a patient stance with Yahoo. Yahoo's board has been "very deliberately and very logically" sorting out its plan, Mr. McAdam said Feb. 5 on CNBC's "Mad Money."

"At the right price I think marrying up some of their assets with AOL under Tim Armstrong's leadership would be a good thing for investors," Mr. McAdam said.

-- Bloomberg News

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