American wireless network giant, Verizon, is exploring options of selling its media assets, Yahoo and AOL, amid high competition from behemoths like Facebook and Google.
The interest in selling off Yahoo and AOL will hopefully help the biggest telecom company (based on the number of subscribers) recover from a series of not-so-lucrative acquisitions. Potential Sale of Verizon media assets, involving Apollo Global Management Inc, can rake in $4 to $5 billion, according to the Wall Street Journal.
Verizon acquired the once quite successful online platform, AOL, for $4.4 billion back in 2015. It was followed by another acquisition, Yahoo, two years later. These Verizon media assets were then merged into a new venture known as Oath (renamed back to Verizon Media), which was led by the then AOL CEO Tim Armstrong (whose employers include Google too).
In 2018, Verizon announced a hefty $4.6 billion write-down of its media assets. Admitting to defeat because of constant competitive pressure by Facebook and Google in the digital ad business, according to an SEC Filing.
“Verizon’s Media business, branded Oath, has experienced increased competitive and market pressures throughout 2018. They have resulted in lower than expected revenues and earnings. These pressures are expected to continue. And result in a loss of market positioning to our competitors in the digital advertising business. Oath also has achieved lower-than-expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses.”
Basically, the Google, Facebook, and Amazon troika has a strong monopoly over the digital advertising sector and also poses as a barrier to entry for other players. These giants tech corporations eat up the lion’s share of the total ad revenue and Oath wasn’t able to compete with that.
Verizon’s media assets sale does not come as a surprise. It had already started shedding pieces of its digital existence. Last year, the telecommunications giant sold HuffPost to BuzzFeed and blogging website Tumblr to the owners of WordPress. Verizon Media also owns Tech Crunch and Engadget.
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