Oath springs up from Yahoo
Mayer out as Verizon closes $4.4B deal, then combines it with AOL
The deal is done: Verizon is now the owner of Yahoo, one of the original Web portals.
The telecommunications giant won a four-month sale process in July 2016 and agreed to pay $4.8 billion for Yahoo. The price tag was reduced to about $4.48 billion in the wake of two massive data breaches Yahoo revealed.
Yahoo itself will be no more. Verizon is combining the Net media company with AOL, another original Web giant, to create Oath, a new company with 50-plus media and tech brands including AOL.com, HuffPost, Yahoo Sports and Yahoo Mail.
“We are excited to set our focus on being the best company for consumer media, and the best partner to our advertising, content and publisher partners,” Tim Armstrong, the former CEO of AOL who is now CEO of Oath, said in a statement.
Yahoo CEO Marissa Mayer is resigning with the transaction’s closure. Five years ago, Yahoo hired Mayer, who had been a rising star at Google, to help the one-time Web giant to regain ground lost in the digital advertising wars with Google and
Facebook. Mayer helped Yahoo improve its mobile advertising business, but several acquisitions — including the $1 billion deal for Tumblr — failed to gain traction.
Last year, Google and Facebook owned about 33% and 14%, respectively, of the $190.6 billion global digital advertising market, according to eMarketer. Yahoo and Verizon’s AOL and Millennial Media units owned 1.6% and 0.7%, respectively.
Facebook is expected to grow its market share to nearly 19% in 2019, while Google, Facebook and Verizon’s units are expected to remain relatively stable, eMarketer forecasts.
Oath will face “very stiff competition in terms of audience and engagement with companies like Facebook starting to get into original content,” eMarketer ad spending analyst Martin Utreras said.
The size of the combined global audience for AOL and Yahoo will help, and the acquisition made sense for Verizon because its core wireless and broadband services are mature businesses, Utreras said.
“The ad market is definitely a growth area for the economy, so investing in that area definitely could pay off,” he said. But Oath must integrate its various advertising technologies to create a “one-stop shop” for advertisers, he said.
As for Yahoo, it will become Altaba and will consist of the company’s 15% equity stake in Alibaba, valued at about $52 billion, and its 36% equity stake in Yahoo Japan, about $9 billion, as well as other assets.
Altaba will register with the Securities and Exchange Commission as a publicly-traded investment company, headquartered in New York.
Also departing Yahoo’s board is David Filo, who co-founded Yahoo in 1994, and board chairman Maynard Webb.
In a post on Tumblr, Mayer noted the company’s stock recently hit a 17-year high and its market cap hit $51 billion.
“We rebuilt Yahoo with the most efficient workforce and operated with the lowest cost structure in more than a decade,” she said in the post. “This has required the most impressive displays of teamwork, innovation, and resilience I’ve ever seen, and working with you has made my time as CEO nothing short of a privilege.”