By Sarah Krouse 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 24, 2019).

Verizon Communications Inc.'s beleaguered media group is laying off 7% of its staff and is focusing on fewer areas to revive its fortunes, according to people familiar with the matter.

The moves follow a monthslong review of the business by K. Guru Gowrappan, a 38-year-old former Yahoo and Alibaba Group executive who joined Verizon last spring. He succeeded former AOL executive Tim Armstrong, who departed late last year.

Mr. Gowrappan said in an email to staff Wednesday that the business would focus on mobile and video-focused products. Yahoo-branded entertainment and news platforms are particularly important to the unit's strategy, the people said.

Other priorities include creating more video content for its own media properties such as Yahoo Finance and those run by third parties like Roku, as well as generating more revenue from its ad platforms and a streaming video and content delivery system. That system, called Verizon Digital Media Services, works with companies like Hulu, ESPN and Walt Disney Co.

Verizon Media Group had 11,385 employees at the end of 2018 and the planned cuts will impact staff globally, one of the people said. The unit had 12,845 employees after Verizon bought Yahoo in 2017.

The moves are "a strategic step toward better execution of our plans for growth and innovation into the future," a spokeswoman for the unit said.

Mr. Gowrappan's plans highlight the balance Verizon is trying to strike between creating video content that draws users and showcases its network and avoiding pricey large-scale content acquisitions.

Hans Vestberg, Verizon's chief executive, has said the carrier is focused on its network rather than buying media content.

Mr. Gowrappan's plans are the latest attempt to breathe new life into a media business that aimed to become a powerful force in digital advertising.

Formed after Verizon's purchases of AOL in 2015 and Yahoo two years later, the business was initially called Oath and has since been rebranded Verizon Media Group as part of a carrier-wide reorganization.

Despite its ambitions of becoming an advertising giant, the unit has failed to meet revenue targets by selling digital ads. The carrier said in December that it is booking a $4.5 billion accounting charge related to the business and executives acknowledged that core parts of the business -- search and desktop usage -- were under pressure.

Mr. Gowrappan told staff in the email that his new plans were made after an "exhaustive review" in which "we honestly assessed where we are and outlined ambitious but achievable goals that poise us for growth."

He and other Verizon Media Group executives in recent months have focused more on the concept of "membership" to encourage users to spend more time on its properties, the Journal has reported

They identified Yahoo as one of the strongest brands within the business.

Teams working on Yahoo Mail and Yahoo's home page were merged and charged with creating a more cohesive user experience. Meanwhile, staff members are working to channel more content produced by Makers, a feminist media brand, and Build, a brand that conducts live celebrity interviews, into the media group's news and entertainment platforms.

Mr. Gowrappan has halted some efforts to sell brands within the media business, opting instead to shutter flagging brands or services. One app that will close is its WakingNews alarm.

He viewed the process of selling photo-sharing service Flickr last year, for example, as too pricey and time-consuming, people familiar with the matter said.

Despite the layoffs, Verizon plans to hire new engineering and content-development staff. Those new workers will focus on building new services that showcase Verizon's faster, 5G network.

Some of the media group's artificial intelligence and machine-learning staff will work more closely with Verizon's own teams focused on those areas. The carrier is looking for ways to make its media assets showcase the benefits of its wireless network because upgrading to a 5G network sits the center of Mr. Vestberg's corporate strategy.

Write to Sarah Krouse at sarah.krouse@wsj.com

 

(END) Dow Jones Newswires

January 24, 2019 02:47 ET (07:47 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
Alibaba (NYSE:BABA)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Alibaba Charts.
Alibaba (NYSE:BABA)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Alibaba Charts.