Verizon is looking to get deeper into the content delivery business with the acquisition of Los Angeles-based CDN provider EdgeCast Networks, TechCrunch has heard. Owning EdgeCast, and combining it with the carrier’s global network backbone COMMA, will give Verizon access to EdgeCast’s big-name CDN clients while also extending its reach.
According to a source, the deal for EdgeCast — which provides CDN services to the likes of Twitter, Pinterest, and Hulu — is expected to be announced in the coming days, and will be worth more than $350 million. Both EdgeCast and Verizon declined to comment on the matter.
While Verizon has seen success in its wireless practice, growth in the company’s enterprise business has lagged. With the enterprise division expected to remain flat over the next year, adding EdgeCast to the mix could add a profitable new revenue stream.
The deal would follow Verizon’s acquisition of digital media streaming company UpLynk a few weeks ago for a reported $75 million, as the carrier seeks to provide more ways to stream various types of content over its network.
Like UpLynk, EdgeCast would likely become a part of Verizon’s Digital Media Services group. Together, the two acquisitions enable Verizon to provide for more of an end-to-end offering around streaming video, but EdgeCast brings a lot more to the table.
In seeking to differentiate its offering, EdgeCast has rolled out a variety of new services aimed at providing additional value to its customers. That includes a CDN offering just for e-commerce companies, launched in May, as well as the launch of its own DNS routing service in October.
Over the years, Verizon has made various attempts to offer content delivery to Internet companies, but for the most part that usually meant reselling CDN services from third-party providers. (Indeed, a page on Verizon’s Enterprise services portal names both Akamai and EdgeCast as part of its CDN offering.)
EdgeCast is one of several content delivery networks that popped up around the 2005-2008 timeframe to compete with Akamai and Limelight. The company was founded by a group of serial entrepreneurs who had previous success with a company called KnowledgeBase, which had been acquired by enterprise CRM vendor Talisma Corporation. It’s also one of the few network infrastructure companies from that era to not only survive, but thrive in a competitive environment.
The company had more than 6,000 clients and was on pace for a $100 million run rate when it raised $54 million from Performance Equity Management over the summer. EdgeCast has been profitable for several years, company president James Segil told me at the time, which was probably attractive to Verizon.
In all, the company has raised just $74 million, which means a decent payout for investors that include Menlo Ventures and Disney-backed Steamboat Ventures.
What’s less clear is how the acquisition will affect EdgeCast’s reseller business. Since being founded in 2006, EdgeCast has built a tidy and profitable business out of providing the routing and dashboard management for a number of global carriers to deploy CDN Services.
Named clients and partners include Deutsche Telekom, Telus, Pacnet, and PCCW, but it’s also been linked to AT&T for that carrier’s big CDN push a few years back. Being part of a competing carrier in certain markets could mean less reseller traffic, but it could be counterbalanced by increased demand for value-added services and Verizon’s own enterprise clients.