With Yahoo Deal, Verizon Sets Sights on Facebook, Google

By Ryan Knutson

Verizon Communications Inc. is gunning for Facebook Inc. and Alphabet Inc.'s Google.

Its $4.83 billion deal to acquire Yahoo Inc. announced Monday will allow the nation's biggest wireless carrier to become a meaningful player in the digital media industry, which could be as large as $180 billion by 2020, CEO Lowell McAdam said.

"Verizon intends to be a significant player in this space," Mr. McAdam said on a conference call.

Its thesis for the Yahoo investment is content creators and advertisers are hungry for alternatives beyond Facebook and Google as the market for digital media expands for both in-home and mobile consumption. This year, Google collected an estimated 31% of digital ad revenue globally and Facebook had 12%, according to eMarketer. Yahoo and AOL combined have about 2.2%.

"There's been a lot made of are we going to challenge Google and Facebook in this process," Mr. McAdam said. "We're a small player today relative to them. All we need to do is take more than our fair share of the growth of the market and this will be a success for us."

Investing in mobile media will also allow Verizon to draw revenue from a less capital-intensive business, Mr. McAdam said. Verizon spent $3.9 billion in capital expenditures on its networks in the second quarter. It also will give the carrier a new stream of revenue at a time when its core business is slowing.

Verizon Tuesday reported slowing retail postpaid subscribers and declining revenue for the quarter ended June 30.

Write to Ryan Knutson at ryan.knutson@wsj.com

(END) Dow Jones Newswires

July 26, 2016 10:22 ET (14:22 GMT)

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