Verizon sells media businesses including Yahoo and AOL to Apollo for $5 billion

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CNBC 03 May, 2021 - 08:16am 45 views

Apollo acquires Verizon’s Yahoo and AOL businesses for $5B

New York Post 03 May, 2021 - 07:50am

By Will Feuer

May 3, 2021 | 8:50am | Updated May 3, 2021 | 9:50am

Private equity firm Apollo Global Management has acquired Verizon’s media group for $5 billion, the two companies announced Monday. 

Verizon Media, which includes properties from the former internet empires of AOL and Yahoo, will be rebranded as “Yahoo,” the announcement said. Verizon said it will keep a 10 percent stake in the company. 

The sale includes online news outlets TechCrunch, Yahoo Finance, Engadget and others. Apollo and Verizon said they expect the sale to close in the second half of 2021.

Verizon is cutting its losses on its media businesses, with the deal valuing the businesses at significantly lower prices than Verizon paid just a few years ago. Verizon bought AOL for $4.4 billion in 2015, and it bought Yahoo for $4.5 billion in 2017.

Verizon will get $4.25 billion in cash for the properties, in addition to its 10 percent stake in Yahoo. 

The COVID-19 pandemic hammered the advertising market a year ago, sending revenue for advertising-driven online publications into a spiral. In the announcement of Monday’s deal, Verizon Media CEO Guru Gowrappan touted the company’s strong recent recovery from last year’s lows. He added that Apollo will help the company grow its “full stack digital advertising platform.”

“We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth in digital media, advertising technology and consumer internet platforms,” David Sambur, co-head of private equity at Apollo, said in a statement. “Apollo has a long track record of investing in technology and media companies and we look forward to drawing on that experience to help Yahoo continue to thrive.”

The deal is Verizon’s latest step toward exiting the media market. Verizon sold HuffPost to BuzzFeed last year and it also recently sold off or shut down other properties including Tumblr and Yahoo Answers.

As it exits media, Verizon is expected to focus on its core wireless networks business and other internet provider businesses. 

For once-powerful media giants AOL and Yahoo, the deal represents failure to adapt and thrive as the consumer internet evolved. The two companies were early titans as the consumer internet formed, but have now become the latest media operations to fall into the hands of private equity. 

Verizon is selling its media group to Apollo for $5 billion

CNET 03 May, 2021 - 07:49am

Verizon will retain a 10% stake in company, which will be called Yahoo and be led by Verizon Media CEO Guru Gowrappan. 

"With Apollo's sector expertise and strategic insight, Yahoo will be well positioned to capitalize on market opportunities, media and transaction experience and continue to grow our full stack digital advertising platform," said Gowrappan in a press release. "This transition will help to accelerate our growth for the long- term success of the company."

Verizon acquired AOL in 2015 and Yahoo in 2016, paying about $9 billion for the pair. In 2017, Verizon merged AOL and Yahoo into its business, creating the media division dubbed Oath that was later rebranded to Verizon Media.

Last week, the Wall Street Journal reported that Verizon was looking to sell off the brands and to exit the digital media business. Verizon Media sold the Huffington Post to BuzzFeed in November 2020. 

The deal with Apollo is expected to close in the second half of 2021.

Verizon to Sell Yahoo, AOL to Apollo for $5 Billion

The Wall Street Journal 03 May, 2021 - 07:29am

The private-equity firm is paying $4.25 billion in cash for a majority stake in the media assets and providing Verizon with interests in the businesses totaling $750 million. In addition, Verizon will keep a 10% stake in a new company, called Yahoo, that will be formed to operate the business.

The Wall Street Journal earlier reported Apollo’s interest in Verizon Media’s business, which mostly struggled to grow against Alphabet Inc. ’s Google and Facebook Inc. Verizon Media had about $7 billion in revenue last year.

Other suitors previously showed interest in buying off certain pieces of the media unit, which includes websites such as TechCrunch and Yahoo Finance, but weren’t willing to make an offer for the whole portfolio, according to a person familiar with the matter.

Verizon collected some of the web’s best-known brands starting in 2015 with its purchase of AOL, followed by its 2017 acquisition of Yahoo. AOL’s then-chief, Tim Armstrong, called the new business a super channel for advertisers to reach hundreds of millions of users.

Verizon to sell media business, including Yahoo, AOL to Apollo for $5 billion

Yahoo Finance 03 May, 2021 - 07:10am

Verizon has struggled to grow its media business, declaring them nearly worthless with a $4.6 billion write-down in 2018. Bigger players such as Facebook and Google have sweeped the digital advertising market.

Verizon will get $4.25 billion in cash, preferred interests of $750 million and retain a 10% stake in Verizon Media, as part of the deal terms.

The business will be called Yahoo when the deal closes, which is expected in the second half of 2021, the company said.

Verizon Media's portfolio includes online brands such as TechCrunch, Makers, Ryot and Flurry, according to its website. It reported revenue of $1.9 billion in the first quarter of 2021.

In 2017, Verizon bought Yahoo's internet properties for about $4.48 billion, betting its 1 billion-plus users would be a fertile audience for online ads. It acquired email service AOL for $4.4 billion in 2015.

(Reporting by Eva Mathews in Bengaluru; Editing by Bernard Orr and Shounak Dasgupta)

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Verizon Communications Inc. confirmed Monday that it plans to sell its media business to Apollo Funds in a $5 billion deal.

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(Bloomberg) -- Verizon Communications Inc. said it’s selling its media division to Apollo Global Management Inc. for $5 billion, a move that will jettison once-dominant online brands like AOL and Yahoo.The unit will be known as Yahoo after the close of the transaction, which is expected in the second half of this year, Verizon said in a statement Monday. Guru Gowrappan will remain chief executive officer of the media group. Verizon will keep a 10% stake in the business, it said, confirming an earlier Bloomberg News report.With the sale, Verizon is unloading the remnants of an ambitious but distracting foray into online advertising. Last year, the telecom giant agreed to sell the HuffPost online news service to BuzzFeed Inc., and in 2019 it sold the blogging platform Tumblr.The phone company’s priority today is its wireless business and the construction of a multibillion-dollar network for advanced 5G services.Verizon’s investments in online advertising never really paid off. The company acquired AOL for $4.4 billion in 2015. Tim Armstrong, head of AOL, said at the time he wanted to build a “house of brands” at Verizon under a division dubbed Oath. In 2017, the company bought Yahoo!’s internet properties for about $4.5 billion, betting its 1 billion-plus users would be a fertile audience for online ads.But in 2018, after Hans Vestberg took over as Verizon’s CEO, the company wrote off more than $4 billion of its media holdings, or roughly half the value of those business, and renamed the division Verizon Media Group.Verizon Media has more than a dozen online brands. The portfolio includes TechCrunch, Ryot, Built By Girls and Flurry, according to its website. The division had first-quarter revenue of $1.9 billion, up 12% from a year earlier, according to a filing.Verizon shares were up 0.7% to $58.18 at 9:44 a.m. in New York. They have fallen 1.6% in the first four months of the year, compared with the 11% gain in the S&P 500 Index.(Updates with shares in final paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Verizon paid $4.4 billion for AOL in 2015 and $4.48 billion for Yahoo two years later.

Billionaire investor Warren Buffett is predicting a “red hot” US recovery from the Covid pandemic, but has warned the economy is being hit by rising inflation. Mr Buffett, known as the “Sage of Omaha” for his savvy stock picking, said the coronavirus crisis had sparked a highly unusual recession because so many businesses had continued to thrive. But although he expects a rapid recovery, Mr Buffett also fears that inflation will rapidly pick up in a way that America has not experienced for over a decade. He said: “This economy right now – 85pc of it is running in a super high gear. We’re seeing very substantial inflation.” Rapidly rising prices are viewed with concern by investors as they can eat into returns, drive up interest rates and potentially cause long-term damage to the economy and living standards by eroding the value of workers’ wages. Inflation has not been a challenge in the West since before the financial crisis. However, speaking as his investment firm Berkshire Hathaway announced $11.7bn in profits, 90-year-old Mr Buffett said that overall the economy is currently in good shape. He said: “Right now, business really is very good in a great many segments of the economy.” Berkshire Hathaway has significant stakes in some of the world’s biggest companies, such as Apple and Kraft Heinz. Remarks made by Mr Buffett, who boasts a net worth of $104bn, are carefully monitored by stock markets around the world for his predictions. Flanked by Charlie Munger, vice chairman of Berkshire Hathaway, he also joined to a growing number of critics of special-purpose acquisition companies (SPACs), also known as “black cheque” entities. These businesses raise cash from investors to buy a private company – typically without telling shareholders what the target is. Spacs have been publicised by the likes of tennis star Serena Williams, and it is feared a bubble has built up which could lead to massive losses for some retail investors.

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Verizon Communications Inc (NYSE: VZ) is near a deal to sell Yahoo and AOL to the private equity firm Apollo Global Management Inc (NYSE: APO), renouncing its digital ad competition with Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) Google and Facebook Inc (NASDAQ: FB) to focus on 5G network building, the New York Times reports. The upcoming deal is estimated to value the brands between $4 billion and $5 billion, including Verizon’s advertising technology business. Verizon had acquired AOL for $4.4 billion in 2015. AOL head Tim Armstrong aspired to build a “house of brands” at Verizon under the Oath division. Verizon had acquired Yahoo! ’s internet properties for $4.5 billion in 2017 to tap its over one billion users for online ads. However, Verizon CEO Hans Vestberg wrote off over $4 billion of its media holdings and renamed Verizon Media Group’s division after assuming charge in 2018. Verizon Media’s online brand portfolio includes TechCrunch, Ryot, Built By Girls, and Flurry. The division posted Q1 revenue growth of 12% year-on-year to $1.9 billion. The media business did not prove to be fruitful. Verizon inked an agreement with The Walt Disney Co (NYSE: DIS) in 2019 to offer its new streaming service Disney+ for free to its customers. Interestingly, AT&T Inc (NYSE: T) acquired Time Warner for $85 billion in 2018 to create its streaming platform, HBO Max. Verizon agreed to pay $53 billion in March to license wireless airwaves to help it expand its 5G infrastructure. Verizon also plans to spend $10 billion over the next few years to wire more cell towers and upgrade its systems. The company’s total debt has crossed $180 billion. Price action: VZ shares traded higher by 0.02% at $57.8 in the premarket session on the last check Monday. See more from BenzingaClick here for options trades from BenzingaAnalyst Estimate Record Google Revenue From Pandemic-Driven Online Spend: WSJDish Stock Is Trading Higher As It Selects Cloud Provider AWS For 5G Network© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

(Bloomberg) -- Verizon Communications Inc. is nearing an agreement to sell its media division to Apollo Global Management Inc., according to people with knowledge of the matter, a move that would jettison once-dominant online brands like AOL and Yahoo!.A deal for Verizon Media could be announced as soon as Monday, said the people, who asked to not be identified because the matter isn’t public. Verizon will keep a stake in the business, they said.No final decision has been made and discussions could fall through. The assets could fetch as much as $5 billion, Bloomberg News has reported.Verizon and Apollo declined to comment. With the potential sale, Verizon would unload the remnants of an ambitious but distracting foray into online advertising. Last year, the telecom giant agreed to sell the HuffPost online news service to BuzzFeed Inc., and in 2019 it sold the blogging platform Tumblr.The phone company’s priority today is its wireless business and the construction of a multibillion-dollar network for advanced 5G services.Verizon’s investments in online advertising never really paid off. The company acquired AOL for $4.4 billion in 2015. Tim Armstrong, head of AOL, said at the time he wanted to build a “house of brands” at Verizon under a division dubbed Oath. In 2017, the company bought Yahoo!’s internet properties for about $4.5 billion, betting its 1 billion-plus users would be a fertile audience for online ads.But in 2018, after Hans Vestberg took over as Verizon’s chief executive officer, the company wrote off more than $4 billion of its media holdings, or roughly half the value of those business, and renamed the division Verizon Media Group.Verizon Media has more than a dozen online brands. The portfolio includes TechCrunch, Ryot, Built By Girls and Flurry, according to its website. The division had first-quarter revenue of $1.9 billion, up 12% from a year earlier, according to a filing.(Adds Apollo’s response in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Verizon Will Sell Yahoo and AOL to Apollo: Live Updates

The New York Times 03 May, 2021 - 06:31am

As of

Data delayed at least 15 minutes

The sale also includes Verizon’s advertising technology business. Verizon will retain a 10 percent stake in the overall business, it said in a statement.

“This next evolution of Yahoo will be the most thrilling yet,” Guru Gowrappan, Verizon Media’s chief executive, said in a memo to employees Monday, which was obtained by The New York Times.

Mr. Gowrappan will continue to lead Verizon Media following the deal.

The transaction is the latest turn in the history of two of the internet’s earliest pioneers. Yahoo used to be the front page of the internet, cataloging the furious pace of new websites that sprang up in the late 1990s. AOL was once the service that most people used to get online.

But both were ultimately supplanted by nimbler start-ups, like Google and Facebook, though Yahoo and AOL still publish highly trafficked websites like Yahoo Sports and TechCrunch.

The sale signals the unraveling of a strategy Verizon heralded in 2015 when it acquired the faded internet giant AOL for $4.4 billion. The purchase was meant to give Verizon a pathway into mobile, with the goal of using AOL’s advertising technology to sell ads against digital content. Verizon doubled down on that strategy in 2017 with its $4.48 billion acquisition of Yahoo, which it combined with AOL under the umbrella Oath.

But Google and Facebook have proved to be formidable competitors in the digital advertising market. Verizon acknowledged their might in 2018 when it wrote down the value of Oath by $4.6 billion, attributing the move in part to “increased competitive and market pressures” that had resulted in “lower-than-expected revenues and earnings.”

Still, the business generates plenty of revenue. It recorded $1.9 billion in sales in the first quarter, a 10 percent gain over last year.

For Apollo, it’s an opportunity to further invest in the digital media space — an industry it has already put money behind with deals for Shutterfly, Rackspace and Cox Media. And it has plenty of experience with corporate carve-outs like Verizon’s media business.

Apollo is aiming to propel sales growth with an increased focus on the individual brands that it believes are lost inside a large corporate empire, which could include more premium subscriptions for Yahoo Finance or more sports betting and fantasy leagues as part of its Yahoo Sports business two Apollo executives told The New York Times in an interview.

Apollo is also notably upbeat about the prospect for digital advertising as it puts more money behind those efforts amid regulatory scrutiny of some of the biggest players, like Google. And as ads shift from offline to online post-pandemic, Apollo expects the overall industry to grow.

“Does most of that go to Google and Facebook and Snap and Twitter? Of course,” said Reed Rayman, a private equity partner at Apollo. “But, is there still a role for others in the digital media space to benefit from the rising tide, like Yahoo and the other properties? Absolutely.”

The answer has finally emerged: Gregory Abel, the 59-year-old lieutenant who oversees Berkshire’s non-insurance operations.

“The directors are in agreement that if something were to happen to me tonight, it would be Greg who’d take over tomorrow morning,” Mr. Buffett, 90, told CNBC on Monday.

The admission confirms what many had suspected. Mr. Abel’s star began rising in 2008 when he was named chief executive of what was then called MidAmerican Energy, a power business that Berkshire bought eight years prior. Mr. Abel helped spearhead a series of acquisitions that turned the division — since renamed Berkshire Hathaway Energy — into one of America’s biggest utility companies.

Mr. Abel was named vice chairman of Berkshire in 2018, alongside Ajit Jain, the longtime head of Mr. Buffett’s vast insurance operations. Analysts and investors widely interpreted the move as signaling that both men were contenders to succeed Mr. Buffett as chief executive one day.

Charles T. Munger, Mr. Buffett’s longtime business partner, hinted at Berkshire’s annual shareholder meeting on Saturday that Mr. Abel might be Berkshire’s next chief. In response to a question about whether the company might become too complex to manage, Mr. Munger said, “Greg will keep the culture” — a task that Mr. Buffett has long stressed would be important for Berkshire’s future leader.

The trial, which is expected to last about three weeks, carries major implications, Jack Nicas and Erin Griffith report in The New York Times. If Epic wins, it will upend the economics of the $100 billion app market and create a path for millions of companies and developers to avoid sending up to 30 percent of their app sales to Apple.

An Epic victory would also invigorate the antitrust fight against Apple. Federal and state regulators are scrutinizing Apple’s control over the App Store, and on Friday, the European Union charged Apple with violating antitrust laws over its app rules and fees. Apple faces two other federal lawsuits about its App Store fees — one from developers and one from iPhone owners — that are seeking class-action status.

Beating Apple would also bode well for Epic’s coming trial against Google over the same issues on the app store for Android devices. That case is expected to go to trial this year and would be decided by the same federal judge, Yvonne Gonzalez Rogers of the Northern District of California.

If Apple wins, however, it will strengthen its grip over mobile apps and stifle its growing chorus of critics, further empowering a company that is already the world’s most valuable and topped $200 billion in sales over just the past six months.

The S&P 500 had closed out April with a 5.2 percent gain, the largest monthly gain since November.

Oil prices slipped, as did yields for Treasury 10-year notes. Markets were closed in London for a bank holiday, and trading overall was subdued as some countries marked the May Day holiday.

Indeed, commodity shortages in several industries, including construction, are causing price increases, Alan Rappeport and Thomas Kaplan report in The New York Times. The stresses are the result of rising demand running up against supply chain disruptions and Trump-era tariffs.

Although the Federal Reserve has described the price increases as temporary and unlikely to spiral out of control, pressure on the Biden administration to intervene could grow as it seeks a $2 trillion infrastructure investment package, a price tag that could rise as the cost of building roads, bridges and electric vehicle charging stations increase.

European manufacturing companies are signaling “considerable increases in output and new orders,” according to the IHS Markit purchasing manager’s index report for April.

The seasonally adjusted index hit 62.9 points, the highest ever since the survey data become available in 1997, IHS Markit said Monday.

Procter & Gamble is raising prices on items like Pampers and Tampax in September. Kimberly-Clark said in March that it would raise prices on Scott toilet paper, Huggies and Pull-Ups in June, a move that is “necessary to help offset significant commodity cost inflation.”

And General Mills, which makes cereal brands including Cheerios, is facing increased supply-chain and freight costs “in this higher-demand environment,” the company’s chief financial officer, Kofi Bruce, said recently.

These price increases reflect what some economists are calling a major shift in the way companies have responded to demand during the pandemic, Gillian Friedman reports in The New York Times.

Before the virus hit, retailers often absorbed the cost when suppliers raised prices on goods, because stiff competition forced retailers to keep prices stable. The pandemic changed that.

They have refined their sales pitches to play up air filtration systems, flexible lease terms and swing space and brokers are back in their own workplaces in force. They are acknowledging that some things have changed while also seeking to prove to their clients, and themselves, that the office will soon return to something close to what it was, Rebecca R. Ruiz reports in The New York Times.

With New York City set to reopen fully in July, and many companies expecting to summon workers back this summer and fall, those in commercial real estate are hoping that the rebirth they’ve tried to hasten may finally happen.

“We opened our offices as soon as we were allowed across the country,” said David Lipson, a vice chairman for Savills, a global brokerage firm. “If you’re in the office real-estate business, should you be comfortable getting too comfortable working from home?”

The industry, coming off a boom of continuous growth, has seen commissions fall off as vacancy rates have climbed to their highest levels in decades. Real estate executives, characteristically bullish on their prospects, are facing existential questions.

With 1.3 billion square feet of office space available across America’s top markets — and more now on the market in Manhattan than exists in all of Nashville, Orlando or San Antonio, according to the research firm CoStar — strains in rosy projections are showing.

Verizon Near Deal to Sell Yahoo and AOL

The New York Times 02 May, 2021 - 04:58pm

In making the deal with the private equity firm Apollo, Verizon is acknowledging that it couldn’t compete with Google and Facebook for digital ads. Instead, it will concentrate on building a 5G network.

Verizon once saw media as the future, the linchpin of a strategy to give customers something they couldn’t get elsewhere at a time when all mobile offerings were essentially the same. It has a different vision for the future now.

The phone giant, signaling that it has given up on its media business, is near a deal to sell Yahoo and AOL to the private equity firm Apollo Global Management, two people with knowledge of the matter said on Sunday.

The transaction would be the latest turn in the history of two of the internet’s earliest pioneers. Yahoo used to be the front page of the internet, cataloging the furious pace of new websites that sprang up in the late 1990s. AOL was once the service that most people used to get online.

But both were ultimately supplanted by nimbler start-ups, like Google and Facebook, though Yahoo and AOL still publish highly trafficked websites like Yahoo Sports and TechCrunch.

The deal, which could be announced in the coming days, would value the brands at $4 billion to $5 billion and include Verizon’s advertising technology business as well. The people, who spoke on the condition of anonymity because the talks are confidential, cautioned that the talks could still fall apart.

When Verizon bought AOL in 2015 for $4.4 billion, the company called AOL “a digital trailblazer.” Lowell McAdam, Verizon’s chief executive at the time, championed the deal as part of its “strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium experience.”

Tim Armstrong, the head of AOL, was part of the package, and he soon persuaded Verizon executives to add to its media holdings. Mr. Armstrong orchestrated the 2017 purchase of Yahoo for $4.5 billion — a prize he had been pursuing for years.

In the statement announcing the deal, Mr. Armstrong said, “We’re building the future of brands.”

It was all in the pursuit of almighty “scale,” a business term of art that has almost become a religious mantra in Silicon Valley. But the forces of internet economics had already shifted years before, and user-generated content, whether in the form of Facebook posts or YouTube videos, drove much of online activity. AOL and Yahoo, despite their big audiences, had become distant also-rans.

It is unclear what Apollo plans to do with the business, but it still generates plenty of revenue. The media division recorded $1.9 billion in sales in the first quarter, a 10 percent gain over last year. Apollo has been involved in other media deals. It helped finance the 2019 merger of the USA Today parent Gannett and the local newspaper chain New Media Investment Group, which created the largest U.S. newspaper publisher. And it owns the television and radio stations of the Cox Media Group.

The private equity firm has been on a buying spree in the past few months, announcing deals to acquire the crafts retailer Michaels and the Venetian resort in Las Vegas. It has also had a shake-up in its senior ranks, with its co-founder, Leon Black, announcing in late March that he was stepping down as chairman after the revelation he had paid more than $150 million to the disgraced financier Jeffrey Epstein.

Apollo declined to comment. Verizon didn’t respond to requests for comment. Bloomberg, which first reported the expected deal, said Verizon would maintain a stake in the media arm.

The deal would signal the unraveling of a strategy Verizon heralded in 2015 when it acquired the faded internet giant AOL for $4.4 billion. The purchase was meant to give Verizon a pathway into mobile, with the goal of using AOL’s advertising technology to sell ads against digital content. Verizon doubled down on that strategy in 2017 with its $4.48 billion acquisition of Yahoo, which it combined with AOL under the umbrella Oath.

But Google and Facebook have proved to be formidable competitors in the digital advertising market. Verizon acknowledged their might in 2018 when it wrote down the value of Oath by $4.6 billion, attributing the move in part to “increased competitive and market pressures” that had resulted in “lower-than-expected revenues and earnings.”

Under its chief executive, Hans Vestberg, the company has instead emphasized improving the technology around its mobile business. In March, it agreed to pay nearly $53 billion to license wireless airwaves that will help the company expand its next-generation 5G infrastructure. It also plans to spend $10 billion over the next few years to wire more cell towers and upgrade its systems. The company’s total debt now exceeds $180 billion.

The media business was originally meant to differentiate Verizon from its rivals by giving it unique content offerings, but it didn’t work out that way. The phone carrier instead reached an agreement in 2019 with Disney to offer its new streaming service Disney+ free to its customers. (AT&T, by contrast, spent $85 billion to buy Time Warner in 2018 to create its own streaming platform, HBO Max.)

In 2018, Verizon announced the departure of Mr. Armstrong. The group was restructured and in January 2019, it laid off about 800 workers, or about 7 percent of the staff.

Last year, Verizon began to dismantle the media group with the sale of HuffPost to BuzzFeed.

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