Verizon's failures as a media company are approaching unparalleled territory. It poured an estimated $1.2 billion into Go90, including acquiring Vessel and OnCue, before shutting the whole thing down. It bought AwesomenessTV, valued then at $650 million, and sold it for $50 million. It sold Tumblr and The Huffington Post for tiny fractions of their previous value.
But the most spectacular of Verizon's media misfires ended on Monday, when Verizon announced it was selling AOL and Yahoo to Apollo Global Management for $5 billion. That's about half what it paid for the two companies, not including the huge sums it has poured into trying to make them a big business. At their peaks, AOL and Yahoo were worth about $325 billion combined. Now even $5 billion seems like a lot.
When Verizon bought the companies — AOL in 2015 and Yahoo in 2017 — the idea was to bring two giant brands together to form a third advertising giant next to Facebook and Google. It made a certain kind of sense: The market is so large that even a distant third- or fourth-place player would be a mammoth business. Yahoo and AOL both also operated huge media businesses, and had first-party email and other products that could have helped Verizon compete head-on with the ad giants. "The world is going mobile, and it is going there really quickly," AOL's then-CEO Tim Armstrong said when Verizon bought the company.
The theory behind the acquisition was the right one: Streaming did quickly come to dominate the internet. But in trying to buy its way to scale, Verizon bought two slowly dying brands, merged them into one, renamed the whole thing to Oath, and watched it all die even faster. By 2018, Verizon had already written down Oath's value by more than $4 billion. At about the same time, as Hans Vestberg took over as Verizon's CEO, it became clear that the company was going to spend its time and money on 5G spectrum and infrastructure projects, rather than trying to build media brands. Verizon splashed $53 billion on 5G spectrum in an auction earlier this year, and is spending billions more on its broadband infrastructure.
In recent years, Verizon's content moves have been almost entirely about partnerships. It offers Disney+, Apple Music, Discovery+ and other services to subscribers, often for free. The old Verizon thought it had to make and distribute its own content to be more than a dumb pipe; the new one believes that combining billing, accounts and data into a single place might be enough.
As for Yahoo and AOL? Apollo is putting the whole company under the Yahoo brand, thus making it the third company to try and make Yahoo cool again. (The exclamation point is still gone, though.) It's hard to know what, exactly, it will look like. "Apollo has a powerful vision that includes aggressively pursuing growth areas in commerce, content and betting," Vestberg said in a memo on Monday. He also noted the synergies with Apollo's other investments, like Harrah's, Norweigan Cruise Lines and Chuck E. Cheese's, "who can benefit from Media's e-commerce platform."
Some of Yahoo's most successful products, like Yahoo Finance and Yahoo Fantasy, should figure prominently into that future. Sports betting in particular has become a cornerstone of the media business. But the new Yahoo also still owns a search engine, a mail service and brands like Netscape and CompuServe. Yahoo Mobile, a new MVNO, was another play for relevance that made slightly more sense inside Verizon than it will for Apollo. And Yahoo has put a lot of resources into Yahoo+, a subscription service that encompasses a lot of Yahoo products and some others.
Building a suite of barely-related products is a risky move for a beloved brand, and a head-scratching one for a brand whose relevance peaked two decades ago. Vestberg said Apollo was the right partner because it leveraged "the entire Verizon Media ecosystem of adtech, affiliate relationships, data, insights, targeting and reach." The appeal of the ad tech world may be stronger than ever, as the backlash against the Facebook-Google duopoly continues and as companies like Amazon and Roku prove there's plenty of digital ad money to go around.
But Apollo will have to figure out what Yahoo is, what it isn't, and whether anyone cares, or risk watching the company's value crash even further.
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