Bloomberg has reported that Verizon approached AOL regarding a potential joint venture or acquisition for the expansion of Verizon's offering in mobile video, sources familiar with the matter reveal.
Verizon has not yet sent a formal proposal to AOL, with no agreement being said to be imminent, according to the sources.
The main interest of Verizon in AOL is the company's programmatic advertising technology that manages the automated selling and buying of online advertisements. Two sources say that Verizon could combine the technology with an online video product that the company could release in the future.
If Verizon proceeded with a takeover of AOL, it would also acquire Internet assets, such as news websites TechCrunch, The Huffington Post, and Engadget, in addition to 2.3 million paying subscribers for access to the Internet.
It is not clear, however, if Verizon has an interest in the media properties, which collectively attract 200 million unique visitors monthly. This number is good for fourth in the United States, behind only Google, Yahoo! and Facebook, according to data in November by research company ComScore.
A joint venture, on the other hand, will allow Verizon to place its attention on AOL's advertising technology as Verizon looks for expertise in the areas of advertising, mobile video and online content.
Tim Armstrong, CEO of AOL, has transformed the Web portal into an entirely new company just a few years after the failed merger with Time Warner, which resulted in the spinoff of AOL from Time Warner.
AOL was one of the first major portals for users to access the Internet. It was acquired by Time Warner 15 years ago for $124 billion, but after that, the company began to lose customers due to better services being offered by other telephone and cable companies. After years of continuous losses, the merger was dropped with the spinoff of AOL in 2009.
One of the reasons for Verizon's proposal with AOL would be for the company to better compete with AT&T, which last year signed an agreement for the $48.5 billion purchase of DirecTV, a satellite TV provider.
However, two factors could hamper Verizon's ability to acquire AOL. The first is the fact that Verizon is still paying debt that it raised last year from buying out Vodafone's 45 percent share in the company for $130 billion. The second hurdle is that Verizon is collecting cash to bid for wireless spectrum in an auction that started in November.