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Tim Armstrong, the leader of
Verizon Communications
Inc.
The media and advertising companies are in talks to get out, according to people familiar with the matter, leaving the unfinished task of building unity into a giant of digital content.
Mr. Armstrong, who arrived at Verizon in 2015 when he acquired AOL and helped drive his purchase of Yahoo two years later, attempted to combine the two Internet companies to challenge Google and
Facebook
Inc.
in digital advertising. But so far, these efforts have failed to generate much growth or to ensure that the unit, called Oath, is more than a secondary note in the wireless giant's profits.
There have been recent discussions about whether the Oath activity should be withdrawn, but Verizon has instead decided to more closely integrate some of its activities with the rest of society. Armstrong, 47, is in talks to leave next month, they said.
Verizon's fight to transform the mix of advertising, video, e-mail, virtual reality, sports and news brands into a business whose revenue stream continues to grow highlights the strategic research done by the carrier. last years.
Last year, Verizon was looking for, but did not buy, a major provider of video content and has so far avoided the transformative mergers that its phone competitors have pursued. Earlier this year, company leaders said they were more interested in creating a better wireless network than in the content that flows through it.
Verizon spent about $ 9 billion to buy both AOL in 2015 and
Yahoo
In 2017, Verizon became a major player in media and advertising, even though companies accounted for less than 5% of advertising revenue in the United States.
The largest US subscriber operator has united the two brands into one unit under Mr. Armstrong's leadership, claiming that it offers a chance to combine the data of more than 100 million wireless customers with about 1 billion visitors per months on sites such as HuffPost.
Verizon and Oath executives disagree over what some digital ad unit employees see as a too conservative approach to using wireless subscribers' data to increase Oath's advertising revenue.
Verizon's senior executives fear being alienating lucrative wireless customers in the name of adding additional ad revenue, these people said. Oath generated less than $ 4 billion in revenue in the first half, compared to $ 44 billion in the wireless sector.
Verizon has agreed to share with Oath anonymous information about age, gender, phone language and subscriber data plan size, for example. But these people say that the carrier has refused to share information about the applications used by customers and their web browsing activity, unless users have explicitly opted.
Only about 10 million subscribers have opted for the "Verizon Selects" program, which offers promotions in exchange for the ability to target ads based on usage, location, and other behaviors of users and users. Web.
The Verizon subscriber group from which Oath could pull data was also smaller than some AOL and Yahoo employees expected, say people. Of the 116 million Verizon subscribers, only about one-third were account holders whose identities had been verified. Others were members of family plans or employees of the government and businesses, said these people.
This summer, Mr. Armstrong briefed Oath executives at the Sunnyvale campus in California, on Yahoo's campus, that he was handing over his day-to-day responsibilities to K. Guru Gowrappan, former executive of
Alibaba Group Holding
Ltd.
who joined the unit this spring, according to a person familiar with the meeting.
Half of an incentive award of about $ 60 million awarded to Mr. Armstrong in connection with the acquisition of AOL was acquired in May and the balance should to be acquired next spring, according to a regulatory filing. Discussions on Mr. Armstrong's future are continuing, the people said.
Lowell McAdam, the long-time CEO of Verizon who conceptualized AOL's contract with Mr. Armstrong at a conference in Sun Valley, Idaho in 2014, retired in late July. His successor, former CEO of Ericsson, Hans Vestberg, said he was focusing mainly on setting up a 5G network faster than on content.
In recent years, two incursions in the field of video streaming have failed to make Verizon a must-have content provider. Earlier this year, Verizon closed a mobile video application called go90 and sold its stake in AwesomenessTV, which produces short programs.
In recent months, Armstrong has asked Verizon to better utilize its retail stores to promote Oath's services, including the ability to watch NFL football games on Yahoo Sports, said one of the attendees. . The unit is working to get more preloaded Oath apps in new smartphones, which could boost usage.
Meanwhile, leaders have been trying to stifle rumors in recent months that Verizon was planning to unload the Oath unit.
"There is no intention of launching Oath in a particular format," McAdam said during his press conference with analysts in July. "We see the synergies that we expected to see and we see the future we hoped for".
Write to Sarah Krouse at [email protected]
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