If You're Surprised By Verizon's AOL, Yahoo Face Plant, You Don't Know Verizon

from the yet-another-face-plant dept

So for years we've been pointing out that Verizon's attempt to pivot from grumpy old telco to sexy new Millennial ad brand hasn't been going so well. Oddly, mashing together two failing 90s brands in AOL and Yahoo, and renaming the coagulated entity "Oath," didn't really impress many people. The massive Yahoo hack, a controversy surrounding Verizon snoopvertising, and the face plant by the company's well-hyped Go90 streaming service didn't really help.

This week, Verizon was forced to acknowledge that Oath was now effectively worthless, at least in full context of what Verizon paid for it, and the company's past claims that the company would be taking on Facebook and Google in the online advertising wars for a generation to come:

"Verizon announced Tuesday that it would take a $4.6 billion writedown on its the media unit, which includes Yahoo and AOL. Oath's brand value is now worth just $200 million, according to Verizon. That's a stunning decrease in value since it formed in 2017. Verizon said Oath's brand was worth $4.8 billion when it last accounted for the company's goodwill valuation. With virtually no goodwill brand value, Oath's overall value (assets and goodwill) is now worth half of what it was a few years ago.

While some folks reacted with "shock" on Twitter, none of this should really have been a surprise to anybody who has watched Verizon do business over the last decade or two.

Pretty much every time Verizon wanders outside of its core competencies (operating admittedly excellent networks, lobbying to hamstring competition, being misleading about net neutrality), Verizon falls flat on its face. Whether it's the company's failed Go90 platform, failed video joint venture with RedBox, failed news website Sugarstring (which you may recall tried to ban reporters from talking about surveillance or net neutrality), its app store, its "me too" VCAST apps, or any of a dozen other countless efforts to expand into less familiar territory, Verizon failed. Usually semi-spectacularly.

This happens because having spent the better part of a generation engaged in turf protection and lobbying, telcos really can't innovate. We've known this for more than a decade, yet somehow, each time Verizon announces some new pivot, we forget. Telecom executives tend to think they can overcome this character flaw via megamerger, which usually just saddles the company with oodles of additional debt, but doesn't really address any of the sector's core shortcomings, built on the back of being largely government-pampered natural monopolies for the better part of a generation.

A big part of Verizon's attempted pivot to Millennial video ads was courtesy of former CEO Lowell McAdam, who left the company last summer. His predecessor, Ivan Seidenberg, believed that Verizon should remain focused on what it does best (sometimes): building better, faster networks. Seidenberg was a big reason for the company's $24 billion push into pure fiber with "FiOS." McAdam came in, froze most of those deployments, then tried to turn a legacy telco into Google. It didn't work, and anybody who is surprised by that hasn't watched Verizon do business.

All of that said, a company SEC filing effectively blamed McAdam and his team for the failure. As of this writing, that appears to have been enough to satisfy the company's investors, who are clearly eager to ride the hype waves emanating from Verizon's next big unfulfilled promise.

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Filed Under: internet, media, telcos, writedowns

Companies: aol, oath, verizon, yahoo