Verizon to Cut 7% of Media Group -- WSJ
January 24 2019 - 3:02AM
Dow Jones News
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.
Altaba (NASDAQ:AABA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Altaba (NASDAQ:AABA)
Historical Stock Chart
From Sep 2023 to Sep 2024