EdgeCast acquired for $350 million by Verizon

by Garrett Reim
December 9, 2013

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Verizon is acquiring Santa Monica-based EdgeCast Networks for $350 million. The deal, though not yet the amount, was confirmed this morning by Verizon in a press release. Verizon said it hopes it will be complete in early 2014.

“Having journeyed from startup to technology leader in a short seven years, the time is right for EdgeCast to elevate itself again by joining Verizon to continue our innovation and growth,” said Alex Kazerani, EdgeCast Networks chairman and CEO in a statement.

EdgeCast, whose website touts “performance is our product,” makes its money by efficiently coordinating the delivery of digital content. Labeled a ‘Content Delivery Network’ (CDN) EdgeCast provides services to a number of prominent Internet companies including Twitter, Yahoo, Pinterest, Tumblr, and Hulu. For a recent Built in LA profile of the company click HERE.

As of this summer, EdgeCast was on track for a $100 million run rate and, according to the company’s CEO, is profitable. In the last two years, it also listed on the Deloitte Technology Fast 500, ranking as the fastest-growing Internet company in 2012. Heavily ventured-backed, the company has raised $74 million since it was founded in 2006.

Verizon is best known for success in its consumer-driven sub-divisions like Verizon Wireless and Verzion FiOS, but has lacked some offerings on its enterprise focused Verizon Digital Media Services. Typically, Verizon has partnered with third-party vendors like EdgeCast to complete enterprise broadband sales. Verizon said EdgeCast’s complementary CDN capabilities will help it “further improve and increase its ability to meet the exponential growth in online digital media content, as well as broaden its portfolio of site acceleration services for digital enterprises.”

Verizon also recently acquired Newbury Park-based upLynk, a video streaming service, for $75 million. In a November 2013 press release, Verizon said, because of the upLynk acquisition, customers will be able to take advantage of “increased speed to market, simplified workflows and access to a highly efficient and data-rich broadcast cloud technology.”

Before EdgeCast was acquired it had CDN licensing agreements with telecommunications providers like T-Mobile and Pacnet; now that Verizon has acquired EdgeCast, it is not clear how licensing relationships with other telecommunications companies will fare.

Verizon’s acquisition of EdgeCast echoes a larger media industry trend of vertical integration. Since Comcast announced a buyout agreement with NBC Universal in late 2009, the industry has been racing up and down the media supply chain buying and building companies.  Even search engine giant Google is in step with the trend installing its own broadband called ‘Google Fiber. Media companies hope greater ownership of the supply chain can increase control of their business and add profitable revenue streams. Verizon’s acquisition of EdgeCast is another example of a media company looking to deliver from start to finish.

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