Verizon Mulls Sale Of AOL, Yahoo
Less than a decade after it entered the media business through its acquisitions of AOL and Yahoo, Verizon
Communications reportedly may be preparing to exit the sector,
According to The Wall Street Journal, Verizon is “exploring” whether to unload its media properties, which could fetch a price of $4 billion to $5 billion. According to the newspaper, private equity giant Apollo Global Management
is part of the “sales process”. A spokesperson for Verizon didn’t respond to a request for comment for this story.
AOL’s CEO Tim Armstrong gave up a golden parachute bonus to remain with the company
when Verizon acquired AOL for $4.5 billion in 2015. He told The Wall Street Journal that joining forces with the biggest wireless carrier would “create what I think is the largest mobile and video business in the United States.”
Two years later, in a press release touting the company’s $4.48 billion purchase of Yahoo, Verizon CEO Lowell McAdam crowed that the deal would put “Verizon in a highly competitive position as a top global mobile media company; and help accelerate our revenue stream in digital advertising.”
Both Armstrong’s and McAdam’s forecasts proved to be wildly inaccurate.
In addition, the combination of more than 100 million wireless customers and the 1 billion monthly visitors to sites such as Yahoo Sports, HuffPost, and TechCrunch never made much sense to many observers.
The businesses’ ill-advised name of Oath was meant to communicate Verizon’s long-term commitment to the media business, didn’t help matters. The sites accounted for roughly 3 percent of online ad spending, which is dominated by Google and Facebook.
“Yahoo and AOL, born during the age of desktop PCs hooked up to dial-up Internet connections, managed to capture more ad dollars but struggled to reach audiences that had shifted their attention to mobile apps,” The Journal said.
Armstrong reportedly left Verizon in 2018 after the wireless giant shelved plans for a spin-off of Oath with him as the CEO. In 2017, Armstrong laid out a “roadmap” to 2020 where the division would generate between $10 billion and $20 billion in annual revenue. His forecast was off the mark. Verizon Media reported 2020 sales of $7 billion.
McAdam retired as Verizon CE) in 2018. His successor Hans Vestberg ordered the media business to conduct a review of its operations. As a result, Verizon took a $4.5 billion write-down, effectively rendering it worthless. Verizon Media also eliminated 750 jobs, roughly 10 percent of the staff of both Yahoo News and HuffPost,
Verizon Media continues to shrink through job cuts and divestitures. The company agreed in November to sell its HuffPost news operation to BuzzFeed. It unloaded the Tumblr blogging platform to the owner of WordPress for a nominal sum in 2019.