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.
Filed Under: internet, media, telcos, writedowns
Companies: aol, oath, verizon, yahoo
Comments on “If You're Surprised By Verizon's AOL, Yahoo Face Plant, You Don't Know Verizon”
Mayer's genius
All those people critical of Melissa Mayer should be thinking twice. Despite decades of trying nobody was able to turn Yahoo! into a viable media company, and Verizon could not do it with its notable resources. Mayer was at least able to foist it off on some rather unclever saps for an oversize sum of money. That is more than any of its other CEOs were able to achieve.
Re: Mayer's genius
Various outfits, including Microsoft, had repeatedly tried to buy Yahoo.
Re: Re: Mayer's genius
“Various outfits, including Microsoft, had repeatedly tried to buy Yahoo.”
To be fair, this was nearly a decade before the Verizon deal, the company had not yet gone through some of its most major mishaps and Microsoft would continue to partner with them for years after the failed bid.
It’s questionable as to whether or not it would have achieved anything better under MS, but some of those purchases did seem to make more sense than the Verizon deal, even if the actual amount offered is debatable.
Re: Re: Mayer's genius
Wow, Yahoo (with Yang as CEO) turned down $44.6 billion from MS in 2008 because it “substantially undervalue[d]” them. Meyer got $4.83 billion from Verizon, and now it’s $200 million. Maybe we can crowdfund an offer for $10000 or so in a few years and donate Tumblr to archive.org. Plus we’d run Techcrunch Disrupt and could troll some VCs.
So...
… I foresee that Verizons customers are going to pay for this fiasco with the introduction of some “clever” price hikes.
So...
…what Verizon has really done is announced they’re taking a 4.4 billion dollar LOSS on their taxes.
We ALL get to pay for *that*.
From a group psychology management perspective what Verison did was add a controlled monopoly (where competition is dirty word)to two ex upstart ventures (where monopoly is a dirty word) with the expectation that the monopolist would be motivated by the capitalists and capitalists restrained by the monopolists and that this would produce an utopian company but what happened was that they created diabolical hell for management and the workers so nothing gets done.
“While some folks reacted with “shock” on Twitter,”
Anyone who is actually “shocked” should be first considering why they were reacting on Twitter rather than the longer established AOL and Yahoo platforms. They might get part of their answer.
It seems the only people surprised by this are Verizon executives, who are also the ones who know Verizon the least.
Dear Verizon...
What we want from you is dumb pipes. We’ll find our own entertainment, thank you very much.
Re: Dear Verizon...
Yeah! As I like to say, “Stay in your lane.” But they never do.
Re: Dear Verizon...
Well, that’s what we want, but do we really want it from Verizon?
Re: Dear Verizon...
“What! We can’t have you simply finding your own entertainment over dumb pipes! We need to shut down net neutrality so you get to experience the entertainment we want you to!”
On a related note...
The funny thing is, Oath is the “official” owner of Tumblr. Now you know why Tumblr enacted the NSFW ban on Tumblr: Verizon knew it would drive the value of the service—and Oath, by extension—into the ground, which would in turn make Tumblr easier (read: cheaper) to sell off.
Verizon no longer wanted the constant headache that is Tumblr if it was not going to make them money; so long as “adult content” was on the service, it would never be anywhere approaching profitable. Rigging Tumblr to fail and thus drop to fire sale prices was the only option Verizon had left. And if nobody buys Tumblr (in part because of the massive hit to its userbase numbers caused by the Purge), Verizon can just axe the whole thing in the end and say it was about FOSTA/SESTA (“Foster Sister”?) or whatever.
The Tumblr Purge is ultimately about Verizon finding some way to rid itself of a massive headache. Unless someone can provide a better explanation, that is the one I am sticking with.
Re: On a related note...
“Unless someone can provide a better explanation”
Honestly, given the histories of the companies involved? If you have to choose between “they deliberately tanked the company” and “they panicked in response to its removal from the IOS store and botched the response completely”, I’d be picking the latter. Unless there’s more evidence forthcoming, I’d be doubtful that there was anything else going on there.
Re: Re: On a related note...
Given the stories out there about how Tumblr was planning the Purge well before the App Store ban, I can believe that the response to said ban was rushed. And yet, I still believe the ultimate goal of the Purge was to tank Tumblr on purpose so it would be easier for Verizon to either sell or shut down Tumblr without much fuss.
Re: On a related note...
I think "the company that bought AOL and Yahoo doesn’t understand the Internet" is a much better and simpler explanation. Hanlon’s Razor.
Interview
I interviewed at Oath for an audit job, the Sr. Manager didn’t like me and kibboshed it. Suckers.
Yahoo! paid $6 billion for broadcast.com, Mark Cuban’s “radio wants to be free” company that ran into copyright problems, but not until he got out of it.
AOL used to gleefully terminate user accounts for almost anything, even had “guides” to police its chat rooms (until the wage/hour people ldidn’t like that), and they unplugged anyone who would use their account for business purposes (such as by e-mailing a client). Their censorship was stronger than anything we have now and look what the market did to their once-staggering value.
Once upon a time, AOL’s censorship power was almost absolute. Those who are worried about Twitter and Facebook or Google now should look to this as an example of why censorship will never rule the net. It’s more like once a company starts censoring, they lose relevance. Twitte and Facebook would therefore be the next Big Shorts in the stock market. They’ve already lost a lot of value, particularly Facebook.
The real problem with AOL, Yahoo, and most failed tech companies is that they’re run by the wrong people. There’s nothing wrong with these platforms other than they will never be put in the right hands to make them competitive. Like the kid who demands he be made captain because it’s his ball.
I did my part
I had signed up for a Yahoo email address a very (very) long time ago, and kept it around for all this time. Until they sent an updated T&C in late spring/early summer this year. Some highlights:
It had been a backup email for a while, but I was finally pushed to just delete my account.
Not sure I want to do business with an outfit that calls its self “oath”.
Old MaBell fighting back(a last battle?)
“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. “
Problem comes to WHO manages whats to be made.. and most CEO wont hand over control..
Has anyone noticed how Google and others do things?? Its an old sales trick.. Shot gunning…you do TONS of things and see what works.. If it didnt, you figure out WHY, then Change or Kill the idea.. You have 20-100 things happening at the same time, Each section is abit independent, and responsible for getting it to work..
If it works, Make it work better..
BIGGEST NO-NO…take a free service and make it into a PAY service…ask Hulu. You can Pay for 1 months service/trail.. Binge watch everything from the last 5-12 months and then quit.. it works for the consumer.
You can add Tumblr to the list of brands Verizon owns that are worth zero (in dollar terms and goodwill).