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Why Verizon Took a $4.6 Billion Charge for Oath

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Increased competitive pressure

In Verizon’s (VZ) filing with the SEC on December 11, the company announced that it’s taking a $4.6 billion goodwill impairment charge for Oath—its media business. Verizon formed Oath by combining Yahoo and AOL assets. Verizon spent $4.8 billion to acquire Yahoo and $4.4 billion to acquire AOL. Verizon wrote off almost 50% of the unit’s combined value.

Why did Verizon write off half of the value? Oath hasn’t been able to sustain the pressure on the duopoly of Google (GOOG) and Facebook (FB) in the digital advertising market. According to a report from eMarketer, Google and Facebook are estimated to have accounted for ~57% of the US digital ad market in 2018. Another report from eMarketer mentioned that Amazon (AMZN) has gone past Microsoft (MSFT) and Oath in the US digital ad market.

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