Why is Verizon paying US$4.8 bln for the struggling Yahoo?

United States telecommunications giant Verizon is tipped to buy out Yahoo for US$4.8billion, following the latter going on sale since early this year.Yahoo has long been an ailing brand. Earlier this year, Yahoo announced that it was cutting 15% of its workforce as it looked to reduce operating expenses by more than US$400 million by the end of 2016. It also outlined plans to also exit five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan.According to multiple news sites such as Bloomberg and Wall Street Journal, the deal is likely to encompass some of Yahoo’s core internet businesses as well as real estate. However there are no plans for Verizon to bite into Yahoo's stake in Alibaba Group Holdings and Yahoo Japan, together valued at US$40 billion.Lawrence Chong, CEO of Consulus said the acquisition marks the end of an era and Yahoo’s decline should be served as a warning to brands who claim to be disruptive today without actually being so.“Yahoo was the distruptor in the early days of the internet and it built a huge brand name. But the internet evolved and Yahoo did not," he said. Meanwhile, its competitors and other internet businesses such as Amazon, Google and Facebook continued to evolve their business model to adapt to the new capabilities that technology can bring.He added that Yahoo’s strategy to become a master brand for all things internet was "a tumultuous task" and not one which is viable.Consumers want brands and platforms that are easier to categorise and organise. If you try to be all things, to all audiences, then soon no one will know what you stand for, and you might be forgotten.A content push?While the plans following the acquisition remain unclear, Verizon has steadily been building up its content offering. Last year, it acquired AOL giving its content strategy a major push. AOL is after all the parent company of The Huffington Post and Techcrunch.Freda Kwok, principal consultant at QED Consulting said the acquisition is a good strategic move on Verizon’s part to move into a content publisher role, previously being seen as more a content provider.“However, the options to view and consume content these days are so varied, that it's no longer sufficient to provide the content, but to have exclusive content as well,” Kwok said, adding that premium publishers need to also own platforms. One good example would be Netflix which produces its own content and distributes it on its own platform.Drawing local examples, Kwok observed that telcos such as StarHub are also venturing in a similar direction to adopt this new dynamic. This can be seen through its move into producing short-form content such as telemovies.“Instead of relying on external content publishers, which may not be as platform loyal, these telcos are able to tap on vast consumption data to review and refine audience preferences to create even better content in the fight for audience attention,” Kwok said.