NEW YORK (TheStreet) -- Verizon (VZ) will give AOL (AOL) CEO Tim Armstrong autonomy to oversee and integrate his company's advertising technology platform into a new streaming service that the telecommunications company plans to unveil sometime this summer, Verizon CFO Frank Shammo said Tuesday.
Verizon said a week ago that it plans to acquire New York-based AOL for $4.4 billion in cash in a deal. The transaction, which is expected to close later this year, will allow Verizon, owner of the country's largest wireless network, to offer a streaming service focused on customers who have balked at getting a pay-TV contract.
"Tim will be running this unit, which we envision as being an independent siloed company," Shammo said at a JPMorgan (JPM) investor conference in Boston. "We determined that AOL had one of the best ad-tech platforms and ad-insertion tools in the industry, and that's what we needed. This is a multibillion dollar business from an advertising standpoint."
The decision to acquire AOL, Shammo said, came after the company determined that its nascent Internet-based video service would operate more profitably, and be better able to attract users, if it could sell targeted advertising along with selling monthly subscriptions.
The new service, said Verizon's finance chief, will target consumers who have either ended their pay-TV contracts, or have never subscribed to the traditional pay-TV bundle of 150 or more channels. The service will feature shorter video programming from content producers such as AwesomenessTV and AOL's Huffington Post. Over the past year, Shammo said, wireless traffic at Verizon increased by 54%, most of it in video.