What Are Verizon’s Goals for Its Oath Business?

Verizon takes over Yahoo’s core properties

In June 2017, Verizon Communications (VZ) completed its $4.5 billion acquisition of Yahoo’s core Internet properties following 11 long months of uncertainty, two massive data breaches, and many negotiations. Yahoo’s assets are combined with those of AOL, which Verizon acquired for $4.4 billion in 2015 to create a new digital media and advertising subsidiary called Oath.

Oath’s assets position Verizon to expand its addressable market from millions of wireless and wireline customers to billions of global content consumers. Additionally, Verizon’s management has stated that Oath expects to grow its annual revenue from its current level of $7.0 billion to between $10.0 billion and $20.0 billion by 2020.

What Are Verizon’s Goals for Its Oath Business?

In 3Q17, Oath generated $2.0 billion in consolidated total revenue. Furthermore, the team behind Oath was executing on more than 20 integration work streams during 3Q17, and management reiterated its expectation of realizing $1.0 billion in cumulative cost synergies from Oath through 2020.

Optimism about digital media

The Yahoo and AOL assets complement one another, with Yahoo adding tremendous technical capability and AOL offering great sales and ad-tech capability.

With competition intensifying in the traditional US wireless space, Verizon is seeking to become a key digital advertising player such as industry leaders Facebook (FB) and Alphabet (GOOGL).