Verizon Communications will take a $4.6 billion goodwill impairment charge in the fourth quarter due to weak performance at Oath, its media segment that includes a combined Yahoo and AOL, the company disclosed in a filing Tuesday.
“Verizon’s Media business, branded Oath, has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings,” the filing said. “These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business. Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses.”
The company said the charge arose from revised financial projections for Oath, given weaker-than-expected digital advertising revenue. Verizon rebranded its Yahoo and AOL properties in a bid to challenge Google and Facebook in the lucrative space.
Former Oath CEO Tim Armstrong stepped down from his role last October amid disagreements about the company’s turnaround strategy. Verizon CEO Hans Vestberg has sought to refocus the company on the race to develop 5G technology and has pledged to cut $10 billion in costs over the next several years.
Verizon also said it expects a severance charge of between $1.8 billion and $2.1 billion from an ongoing voluntary buyout program. The company announced Monday that more than 10,000 employees would participate in the program and leave their roles by mid-2019.