Verizon Explores Sale of Media Assets -- Update
29 April 2021 - 8:27AM
Dow Jones News
By Benjamin Mullin and Miriam Gottfried
Verizon Communications Inc. is exploring a sale of assets
including Yahoo and AOL, as the telecommunications giant looks to
exit an expensive and unsuccessful bet on digital media.
The sales process, which includes private-equity firm Apollo
Global Management Inc., could lead to a deal worth $4 billion to $5
billion, according to people familiar with the matter -- assuming
there is one. Other details couldn't be learned.
Verizon splashed out billions of dollars assembling a portfolio
of once-dominant websites, including AOL in 2015, and Yahoo in
2017, paying more than $9 billion in total to acquire the pair.
Verizon, the country's largest wireless carrier in terms of
subscribers, bought the websites intending to resurrect brands that
had lost traffic since their heyday but still counted a base of
hundreds of millions of account holders.
It reorganized the businesses in 2017 under former AOL Chief
Executive Tim Armstrong, dubbing the combined division "Oath" and
signaling its intention to go head to head with digital-advertising
powerhouses like Alphabet Inc.'s Google and Facebook Inc.
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 digital-media business ultimately failed to reach its target
of $10 billion in annual revenue by 2020, and Verizon in 2018 wrote
down about $4.5 billion of its value. Verizon has cut jobs in the
unit, and in November agreed to sell its HuffPost news division to
BuzzFeed Inc. That followed a 2019 agreement to sell the Tumblr
blogging platform for a nominal sum to the owner of WordPress.
The business, which also includes Yahoo Finance and Yahoo Mail
as well as news sites TechCrunch and Engadget, generated $7 billion
of revenue in 2020, down 5.6% from the previous year due to a sharp
advertising pullback during the early months of the coronavirus
pandemic. Business picked up in the second half and the unit has
logged two consecutive quarters of double-digit growth, including a
boost of 10%, to $1.9 billion, in the first quarter.
Despite the rebound, Verizon has focused much of its attention
lately on partnerships with streaming-video services like Disney+
and Hulu that can be bundled with its wireless and home-Internet
plans.
By selling now, Verizon could raise needed cash at a time when
valuations of similar assets are enjoying an upswing. The company
this year committed about $53 billion to secure spectrum licenses
that will support its ultrafast fifth-generation wireless network.
Executives recently told investors that capital spending this year
on network equipment, fiber optic cables and the like could reach
up to $21.5 billion.
Drew FitzGerald contributed to this article.
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com and Miriam
Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
April 28, 2021 18:12 ET (22:12 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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