Verizon’s Head Of Communications Out As Oath Unit Looks Imperiled

Tim Armstrong has had an eventful three years at Verizon. His career at the firm started around the time Verizon bought out AOL and right before the big Yahoo acquisition had to be navigated. He was brought on as the head of Verizon’s media and advertising business, and now it seems he is departing the company, citing personal and family reasons.

According to sources familiar with the matter, Armstrong has begun talks about his separation from the firm, leaving unfinished the task of creating on online content portal ready to rival Google and Facebook in the digital advertising area.

So far, not so good in that attempt.

Oath is the official name for the platform that was created to unite what has been described as a “hodgepodge” of advertising technology, video, email, virtual reality, sports and news brands that exist under Verizon’s umbrella into a single destination for digital explorers that could, in time, build enough scale to generate a steady and reasonable stream of income for the company. But as of yet, that effort has not quite gelled – the unit has neither grown nor seen much revenue come in.

Building digital content platforms to rival Google and Facebook is not working.

Armstrong, according to reports, could be finished at Verizon as early as next month. There had been some rumors that the Oath business was heading for a spinoff, but that idea seems to be off the table. Instead, sources say the plan will be to integrate some of its operations more closely with the rest of the company.

But there are indications that for now, growing Oath – or investing much more in it – is also off the table.

Verizon had been in the market for a larger video content provider last year, but the deal never materialized and seems to be over. Earlier this year, the company shut down a mobile video app called go90 and sold its stake in AwesomenessTV, which produces short shows.

According to reports, Verizon executives have recently been more explicit in stating that they are far more interested in building better wireless networks for data to flow over than they are concerned about what content is flowing through the network itself. CEO Hans Vestberg has said the firm’s main priority for the future is building out its next-generation 5G network.

Verizon spent an awful lot of money on content before it decided it really wasn’t that interested in it after all. Between 2015 and 2017, the firm spent roughly $9 billion acquiring AOL and Yahoo. The hope had been to use the two well-known brands to forge a path in media and advertising. The fact that the two firms collectively represented less than 5 percent of U.S. digital ad revenue was considered less relevant.

The company was also somewhat divided on how to best pursue the market going forward. Verizon and Oath executives clashed with the digital ad unit over what the advertisers saw as an overly conservative approach to using wireless subscriber data to boost Oath’s advertising revenue, according to people with knowledge of the conversations.

Verizon’s executive team didn’t want to risk alienating long-term subscribers for what would at best be incremental advertising revenue. Oath contributed less than $4 billion in revenue during the first half of the year, as the wireless business brought in $44 billion.

Verizon did roll out the Verizon Selects program, which offers promotions to subscribers in exchange for being open to target ads based on their web and app usage, location and other behavior. Digital ad workers complained that even when consumers explicitly opted in, Verizon still refused to share complete information. Only about 10 million users signed on with the program.

Armstrong’s departure was announced to senior Oath leaders earlier this summer. His day-to-day responsibilities will now shift to K. Guru Gowrappan, a former executive at Alibaba Group Holding Ltd. who joined Oath this spring.

How long the unit will go on – or what exact cause it will work toward – remains up in the air. While some have speculated that it seems ripe for liquidation, for now Verizon is still swearing that Oath as a unit is going nowhere.

“There is no intention of spinning out Oath in any particular format,” former CEO Lowell C. McAdam noted on his last call with analysts in July. “We see the synergies that we expected to see, and we see the future that we had hoped for.”