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Verizon is Basically Writing Off Oath

Verizon Communications Inc. said Tuesday that it will write off a majority of its poor performing Oath media business, which includes Yahoo and AOL.

The telecom giant said it will take a $4.6 billion write-down (a $4.5 billion hit after taxes) in the fourth quarter. According to an SEC filing, Oath said it has “experienced increased competitive and market pressures” throughout the year resulting in lower than expected revenues and earnings.

“These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business,” Verizon’s SEC filing said.

Expectations were high when Verizon acquired Yahoo for $4.5 billion in 2017 and AOL for $4.4 billion in 2015, to merge under a broader media company, Oath. Verizon’s goal was to challenge content rivals Facebook, Google and Amazon for ad dollars. But it has been unsuccessful.

Verizon will now focus more on its wireless operations as the company has written down the goodwill portion of its investment in Oath down to $200 million. Oath still has about $5 billion in remaining assets, according to Verizon. Oath’s revenue was down 7% in the third quarter, resting around $1.8 billion—a far shot from its goal of $10 billion in revenue by 2020.

Verizon’s Oath write-off comes on top of Monday’s news that 10,000 employees have accepted the company’s buyout offer, resulting in severance charges between $1.8 billion and $2.1 billion ($1.3 billion and $1.6 billion after-tax) for the fourth quarter.

In September, Oath CEO Tim Armstrong left and was replaced by K. Guru Gowrappan, the company’s president and former chief operating officer.

Correction: A previous version of this article mischaracterized a key financial metric for Oath. Verizon has written the goodwill portion of its investment in Oath down to $200 million, not the unit’s total value. Oath still has about $5 billion in remaining assets, according to Verizon.