Verizon Says Its Media Business, Including Yahoo, Is Essentially Worthless
SUNNYVALE (CBS SF / CNN) -- Verizon just admitted that it's media business, Oath, is essentially worthless.
Verizon (VZ) announced Tuesday that it would take a $4.6 billion writedown on its the media unit, which includes Sunnyvale-based Yahoo and AOL.
Oath is now worth just $200 million, according to Verizon. That's a stunning decrease in value since it formed in 2017. Verizon said Oath was worth $4.8 billion when it last accounted for the company's goodwill valuation.
Verizon snapped up a number of legacy media brands in recent years to create Oath. It bought Yahoo for $4.5 billion in 2017 and AOL, which owns HuffPost, for $4.4 billion in 2015.
The telecommunications giant said the integration of Yahoo and AOL didn't meet expectations.
Oath "has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings," according to a filing with the SEC Tuesday. Facebook, Google and Amazon are sucking up ad dollars, forcing publishers to search for other streams for revenue.
The Verizon media unit's poor performance led the company to make "unfavorable adjustments to Oath's financial projections" for the next five years.
Verizon plans to focus more on wireless technology and less on content and distribution.
This summer, Verizon replaced CEO Lowell McAdam with Hans Vestberg, the telecom company's former chief technology officer.
In September, Oath CEO Tim Armstrong left. He was a driving force behind Verizon's media acquisitions. Armstrong was replaced by K. Guru Gowrappan, Oath's president and former chief operating officer.
Verizon announced Monday that 10,400 management employees had accepted voluntary buyout deals, out of 44,000 who were eligible. The buyouts are part of a plan to cut costs and shift investments into wireless and 5G.
© Copyright 2018 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten. CNN contributed to this report.