Telco Acquisitions Gone Bad
On Tuesday Verizon officially wrote down the value of its Oath subsidiary by $4.6B. This is significant because just two years ago Verizon acquired Yahoo and AOL for a combined $9.2B, and merged them into a single entity called Oath. So if you’re quick on your napkin math you’ve just figured out the two publishers have lost exactly half of their value in 24 months – not exactly a great ROI for Verizon, right? However, Verizon’s Oath bleed pales in comparison to the biggest tech investment by a telco gone bad.
The owner of that dubious distinction might just be AT&T, who has spent a combined $133B (not a typo) on its acquisitions of DirecTV and Time Warner. According to sector analysts at MoffettNathanson, “AT&T has likely destroyed about half the value from its $49B DirecTV deal.” Then there’s the Time Warner side, which they agreed to purchase in 2016. Since then AT&T has been embroiled in a tug of war with the DOJ, who’s trying to block acquisition the over anti-trust claims.
The billion dollar question for AT&T in the coming years is whether or not they can integrate Time Warner’s content on mobile video, and how well they’ll monetize it through bundled subscriptions and ad sales.
AT&T still has time to prove out the value of their Time Warner investment. However, if they can’t turn it around maybe Verizon will have made the best move of all for failing small instead of failing big.