The Carnage Continues

This following is from an SEC filing released today by Verizon regarding it’s “Oath” media business. That’s the unit which owns the assets of Yahoo, AOL and Huffington Post …

Verizon’s Media business, branded Oath, has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings. These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business. Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses. Effective August 1, 2018, Hans Vestberg became Chief Executive Officer of Verizon, and effective October 1, 2018, K. Guru Gowrappan was appointed Chief Executive Officer of the Media business.

In connection with Verizon’s annual budget process in the fourth quarter, the new leadership at both Oath and Verizon completed a comprehensive five-year strategic planning review of Oath’s business prospects resulting in unfavorable adjustments to Oath’s financial projections. These revised projections were used as a key input into the Company’s annual goodwill impairment test performed in the fourth quarter. Consistent with our accounting policy, we applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs, including our revised projections, discount rate and expected growth rates, which resulted in the fair value of the Oath reporting unit being less than its carrying amount. As a result, the Company expects to record a non-cash goodwill impairment charge of approximately $4.6 billion ($4.5 billion after-tax) in the fourth quarter of 2018. The goodwill balance of the Oath reporting unit was approximately $4.8 billion prior to the incurrence of this impairment charge.

There’s accounting stuff in the second portion which I’m not going to try to fully describe or be certain I understand. But the relevant point to me is in the first section. What it comes down to is that they’re losing ground in the battle for advertising revenue and scale is not solving the problem.

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