Layoffs Loom At Verizon’s Oath In The Wake Of $4.5 Billion Writedown

Verizon’s $9 billion bet on the digital media business may rank among the worst blunders in the history of corporate America. Unfortunately, extracting itself from the bad deals won’t be easy.

Selling its Oath digital properties, including HuffPost, AOL and Yahoo, isn’t realistic in the wake of Verizon’s decision to take a $4.5 billion writedown on the business, effectively rendering it worthless. Spinning Oath off would also be difficult because few investors would be interested in buying shares in a company that accounts for roughly 3% of all online advertising sales. Moreover, Oath’s rivals, including BuzzFeed, Vox Media and Vice, are facing challenges similar to Oath’s from the Facebook-Google duopoly, which controls more than half of all online ad spending.

Verizon has little choice but to make the best of a bad situation. According to the Wall Street Journal, Verizon executives “are exploring ways to supplement weaker-than-expected advertising revenue and potentially wind down some AOL or Yahoo brands.” Additional layoffs beyond the 10,400 workers who have voluntarily agreed to leave are in the works.

When Verizon acquired AOL for $4.5 billion in 2015, it had about 4,500 employees. Yahoo had about 4,600 full-time workers at the time of its $4.83 billion sale in 2017.  According to Verizon, there were more than 11,000 Oath workers as of the end of the third quarter.  The wireless giant’s total workforce is about 155,400.

“We are committed to Oath’s success, and yesterday’s 8K disclosures speak for themselves,” writes Bob Varettoni,  a spokesman for Verizon,  in an email.

Telecom experts, including independent analyst Jeff Kagan, were skeptical about Verizon’s move into digital media from the start. In an interview, Kagan noted, “I felt like at the time that it made absolutely no sense to me, and it still makes no sense.” – Forbes