More online video
Verizon bought an Intel-owned firm nearly a year ago that specialized in streaming video over the Web. Experts speculated that Verizon was planning a lateral move into online video to better compete with cable companies and on-demand services such as Netflix. A partnership or merger with AOL would be consistent with this strategy; according to Bloomberg, Verizon may be interested in using AOL's technology to buy and sell advertising, particularly on a "future online-video product."
A media behemoth
AOL may be best known for spending a fortune on promotional CD-ROMs. But today it sits upon a trove of valuable content companies, including the Huffington Post and Techcrunch. While still a far cry from the combination of television programming and cable represented by Comcast-NBC Universal, a combined Verizon-AOL would set up a similar arrangement where one company controlled both content and distribution. It would also more than make up for Verizon's ill-fated experiment with the video company Redbox.
Speaking of Comcast…
Analysts have pointed out that the proposed merger between Comcast and Time Warner Cable will likely prompt further consolidation of the media industry. The logic? Companies will try to follow Comcast's lead, arguing to regulators that if one merger occurs, others must follow in order to maintain adequate competition in the marketplace. Big dogs fighting other big dogs, and all that. By the same logic, a proposed Verizon-AOL deal might make life easier for Comcast if it can claim that other combined companies would keep it from gaining too much control over broadband and programming. So it's possible that rumors of a Verizon deal could help Comcast's own merger prospects with TWC.