Verizon writes down the value of its AOL and Yahoo acquisitions by $4.6B in filing, amid tough competition in the digital advertising industry
Yahoo, Aol, HuffPo—worth only $200m, 30% less than HuffPo alone was worth when Aol bought it. What were they thinking? https://www.cnn.com/... Ben Walsh / @bendwalsh : yiiikes in hindsight, you have to admire/be revolted by Tim Armstrong's ability to get this deal done http://twitter.com/... Jeff Macke / @jeffmacke : Yahoo may not have been a very well run company. http://twitter.com/... Matt Stoller / @matthewstoller : The reality of most mergers is that they ruin companies. If the government overreaches and stops too many mergers, good. That's the kind of error you want to make. http://twitter.com/... Amol Sharma / @asharma : On the bright side, AOL once had to take a $54 billion write-down (AOL Time Warner circa 2002). So this is really not that bad! https://www.wsj.com/... via @WSJ Sean Griffey / @seangriffey : If you are a VC funded media business, you can probably scratch Verizon off as a potential exit. http://twitter.com/... Sarah Wood / @sarahwoodwriter : Well, this is certainly a new, creative way to say they've been fired. http://twitter.com/... Alex Heath / @alexeheath : OK so not almost the whole value, but about half http://www.bloomberg.com/... Peter Kafka / @pkafka : If you are old you will remember when both AOL and Yahoo seemed as synonymous with the Internet as Facebook does today. http://twitter.com/... Peter Kafka / @pkafka : You could see this coming years ago, before the deals were ever done. But the end of Verizon's content ambitons was formalized this summer. http://twitter.com/... Peter Kafka / @pkafka : Verizon writes down $5b of its $10b investment in Yahoo and Aol. http://www.bloomberg.com/... Attention: Disney, Comcast, AT&T @erinscafe : nice to see Verizon sharing that $4 billion in tax cuts with their employees http://twitter.com/... See also Mediagazer
Context & Ripple Effects
The write-down closes a three-year arc that began when Verizon paid $4.4B for AOL and the stock jumped 18% on the deal news, then doubled down by agreeing to pay $4.8B for Yahoo. The stated logic, laid out in Verizon's own planning, was to [[a:872231|compete with Google and Facebook in digital advertising by sharing wireless-customer data with advertisers]].
That thesis never survived contact with the market: after Yahoo disclosed a billion hacked accounts, Verizon first explored exiting and then took a $350M price cut while splitting breach costs. The $4.6B impairment filed this week is the accounting acknowledgment that the combined AOL-Yahoo ad business is worth a fraction of what Verizon paid.
First-order effects
- Verizon's balance sheet absorbs a $4.6B hit, formally valuing the AOL/Yahoo/HuffPo assets at roughly $200M — less than HuffPo alone fetched when AOL bought it.
- The wireless-data-for-advertisers strategy that justified both acquisitions is effectively dead as a competitive answer to Google and Facebook.
Second-order effects
- Deal counterparties and boards pricing future telecom-media combinations now have a fresh comparable showing how quickly carrier-owned ad assets can lose most of their value.
- Commentary around the filing — including Matt Stoller's argument that most mergers ruin companies and that blocking more of them would be a good kind of government error — hands ammunition to antitrust skeptics scrutinizing large media deals.
Third-order effects
- If the pattern holds alongside the earlier AOL Time Warner collapse, the structural lesson hardens: scale buyers outside digital advertising have repeatedly been unable to buy their way into the ad duopoly, pushing carriers back toward connectivity businesses.
- Expect merger review to weigh integration failure risk, not just consumer-price effects, as write-downs like this become the visible cost of overpaid consolidation.
The trend: Carrier-led media rollups are unwinding as Google and Facebook consolidate digital advertising, turning once-celebrated content acquisitions into serial impairments.