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Photo by Jason Persse, via Flickr.

Verizon’s deal to acquire AOL for $4.4 billion promises to transform the telecom giant into an end-to-end media and technology company — from content creation to delivery, supported by a video advertising platform optimized for mobile viewing.

The acquisition, announced this morning, includes AOL sites such as the TechCrunch and Engadget, raising questions about how those tech media sites will cover their new parent. AOL also has a profitable dial-up Internet business, with more than 2 million users, believe it or not, so Verizon’s telecom infrastructure will now span everything from 56 Kbps to 4G LTE.

Verizon CEO Lowell McAdam.
Verizon CEO Lowell McAdam

But the biggest prize for Verizon is AOL’s mobile video and advertising technology.

“Certainly the subscription business and the content businesses are very noteworthy. For us, the principal interest was around the ad tech platform,” said John Stratton, Verizon’s president of operations, as quoted by the Wall Street Journal at an investor conference.

Verizon chairman and CEO Lowell McAdam says in a news release, “Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”

He said AOL’s advertising platform “provides a key tool for us to develop future revenue streams.”

timarmstrong
AOL CEO Tim Armstrong

Tim Armstrong, the CEO and chairman of AOL, is expected to continue to lead AOL after the deal closes. The companies say they expect that to happen sometime this summer, subject to regulatory approvals.

Armstrong said a CNBC interview that the current AOL team has made the company “as big as it can possibly be in today’s landscape. But if you look forward five years, you’re going to be in a space where there are going to be massive, global-scale networks, and there’s no better partner for us to go forward with than Verizon.”

The announcement comes more than 15 years after Time Warner acquired AOL in a deal that came to be regarded as the worst merger of all time.

Update: Kara Swisher of Re/code reports that AOL has been in talks to spin off The Huffington Post, which may still happen.

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