Verizon's digital video efforts ended up an expensive headache
Verizon’s ambitions in the digital video space brought it a lot of headache and expense.
The company reported its second-quarter earnings on Tuesday and revealed that it took a pre-tax charge of $658 million on a “product realignment.”
Translation: Verizon’s closure of go90, its online video platform aimed at youngsters, lost a lot of money. Verizon also noted a stunning number for severance charges in the period: $339 million.
Corporate clear-out: Many of those in charge at Verizon have left their positions. CEO Lowell McAdam is becoming executive chairman while two other senior people — executive vice president of global operations John Stratton and executive vice president of global media Marni Walden — stepped down from their posts, leaving Oath chief executive Tim Armstrong the last man standing. Armstrong is still working hard on bringing Yahoo into Oath — acquisitions and integration costs related to that merger cost $120 million in the quarter.
What’s the future for Oath: The Information reported earlier in July that Armstrong may be considering a buyout of Oath. If that were to happen, it would be another indication that Verizon wants to focus on its wireless business.
Cord cutting: Verizon also detailed the cold winds of cord cutting on its TV business, Fios, which lost some 37,000 customers. Its internet business, however, is a source of growth, with Verizon adding 37,000 broadband subscribers.
The history: Verizon has tried hard to diversify away from its core business of selling wireless service. Verizon had talks about acquiring cable TV provider Charter and, according to court filings, also talked to Shari Redstone about CBS, but is no longer eyeing any big acquisitions. America's biggest phone company will no doubt be watching how AT&T manages to integrate its new Time Warner unit. We'll hear more about that after the closing bell when AT&T reports its numbers.