AOL was poised to become a sugar daddy for a host of companies, but ended up finding its own sugar daddy in the end.
The media and ad tech company planned to raise between $1 billion and $2 billion, possibly in debt, to fund an M&A spree before Verizon ultimately acquired the company for $4.4 billion earlier this year, CEO Tim Armstrong said Wednesday evening at the Code/Mobile conference at The Ritz-Carlton in Half Moon Bay, Calif.
Armstrong said he had a list of five areas in which AOL needed to excel, including video, ad tech and mobile, and planned to fill in gaps through acquisitions. The Verizon tie-up however, would meet several of those needs, Armstrong believed, with the added bonus of not having to pay to make them happen.
With the deal, AOL will continue to look at acquisitions, but he suggested the company now needs a much smaller war chest.
“It’s not like Verizon is going to write giant, open checks,” he said.
One area AOL still seems to be interested in and bullish on is digital media. Armstrong acknowledged that AOL at one point came close to a deal for Business Insider, which recently sold to Axel Springer for more than $400 million. He also said he believes that companies like BuzzFeed and Vox Media, which owns Re/code, are actually undervalued considering how far ahead they are of traditional media companies on the transition to mobile.
“When people wake up,” he said, their valuations “will be much, much higher.”
On a personal level, Armstrong, who has run AOL as CEO for more than six years, said he has adjusted well to his new role as Verizon employee and not CEO.
“I can actually do more work,” he said. Armstrong said there are obviously many good things that come with being the CEO of a public company, but how you are forced to spend your time is not one of them. He said he spent 30 percent of his time as AOL CEO on “ancillary things.”
Armstrong and team sold to Verizon in May, after executing a turnaround by essentially transforming AOL from solely a media and subscription company to an ad-tech company. Its ad-tech division, which focuses on automated ad sales on other publishers’ sites, is bigger and growing much faster than its content division, but has lower margins. AOL’s big media properties include Huffington Post and TechCrunch.
For Verizon, the acquisition is part of a strategy to look for new areas to make money as it competes in a price war with smaller rivals Sprint and T-Mobile over data plans. One area Verizon is heavily focusing on is video, and an advertising platform like AOL’s may be crucial to its financial success. The company is also betting on its own video service for mobile phones, called Go90, that faces an uphill battle in a very crowded field.
This article originally appeared on Recode.net.