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Tim Armstrong convinced Verizon to spend $ 9 billion on Internet media companies in recent years. Now he leaves.
What happens to media companies that he leaves behind?
This is the main question that follows the news that Armstrong is negotiating an exit from the telecommunications company, reported for the first time by the Wall Street Journal this morning.
The story of the WSJ was easy to confirm with some calls, as it turned out to be an open secret that Armstrong had gone to Verizon. This summer, a reorganization of the company deprived him of many of his responsibilities and entrusted K. Guru Gowrappan, the leader of Armstrong last spring, with the daily control of his media empire of the oath.
I've always wondered why Armstrong, after generating a huge personal fortune and a long, difficult tenure as CEO of a public company, blocked Verizon after selling AOL to the telecom company for $ 4.4 billion. dollars in 2015.
In retrospect, it is clearer. After convincing Verizon to spend an additional $ 4.5 billion on Yahoo, Armstrong wanted Verizon to eliminate the combined company, giving it control of a much larger advertising and Internet content company, with strong links to a distributor. giant.
But the split never happened and Lowell McAdams, Verizon's CEO with whom Armstrong worked for the first time, was replaced by Hans Vestberg, who does not seem to share McAdams's interest in becoming a media player.
Note, for example, that under Vestberg, Verizon has closed Go90, a mobile video service that you have never seen. He burned at least $ 658 million in the process.
And while Verizon had already thrown tires at CBS and other potential media acquisitions – Armstrong looked at Time Inc. before Meredith acquired it this year – he said he would not be writing big checks for other media.
Meanwhile, to put all this in perspective: Oath generated $ 1.9 billion in the second quarter for Verizon, or 6% of the company's total revenue of $ 32.2 billion.
So again. What happens to Oath now?
Verizon PR declined to comment. And the semi-official message I've received is that the various components of Oath – sites such as HuffPost, Yahoo Finance, TechCrunch, Engadget and many others – will be fine because they are integrated directly into Verizon and will benefit from its distribution. and scale. Nothing to see here.
On the other hand:
- Guy who built the media empire is going away.
- Guy who sponsored the builder of the media empire is gone.
- The media empire is a small part of a company that no longer seems interested in creating media empires.
Draw your own conclusion.
When you're done, here's a cat that Kara Swisher and I had with Armstrong at Recode & # 39; s Code Media conference last February. Our main question: What are you doing at Verizon? Looks like we were not the only ones asking this question.
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