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Verizon says it won’t spin out Oath from Verizon



SUN VALLEY, ID - JULY 08: Tim Armstrong, CEO and Charman of AOL Inc.
Oath CEO Tim

Scott Olson/Getty

  • Verizon explicitly rejected claims it would spin out
    its digital media business Oath on its second quarter
    earnings call.
  • Recently, advertisers have expressed doubt that

    Oath will be able to compete with Facebook and
  • Outgoing CEO Lowell McAdam said Oath is on schedule
    with its planned integration.

Verizon is standing behind Oath.

On its second quarter earnings call it issued its most explicit
repudiation to date of rumors that it may spin
the digital media unit business out of

“The questions around Oath, I don’t know where they are
coming from,” outgoing CEO Lowell McAdam said. “There is no
intention of spinning out Oath.”

That comment seemed to be a response to recent reports
questioning Oath’s longevity with Verizon.

Advertisers told Business
in June that they have started to doubt whether Oath
will eventually be a digital ad powerhouse that can compete with
Facebook and Google. The sluggishness in Oath’s integration
and its ability to quickly compete against the duopoly is
worrying to advertisers.

[See also:
Some advertisers are cooling on Oath and losing faith in Tim
Armstrong’s vision

“The vision is muddied, the strategy is unclear,” a top ad
buyer said. “They are a jack-of-all-trades, but it’s hard to
discern what they are masters of, if anything.”

And other insiders said that Oath CEO Tim Armstrong has explored
options to spin the business out of Verizon, The Information reported earlier
in July.

Tuesday morning, McAdam said that Oath wasn’t going anywhere, and
that the company is happy with its integration so far.

“We see the synergies that we expected to see, and we see the
future that we had hoped for,” McAdam said. “[CFO Matt Ellis]
talked about in his remarks the integration efforts that are
going on. They are on schedule.”

Perhaps the recent shuttering of
Verizon’s mobile video service go90

will clear the way for increased investment in Oath. Verizon
invested more than $200 million in the platform before announcing
in June that it would cease to exist.

Sources had previously told Business Insider that go90 had
been getting the majority of the recent content investment, but
that that could change with go90 gone.

The company announced a big charge related to go90’s
on Tuesday noting “

a pre-tax charge for
product realignment of $658 million, mainly related to the
discontinuation of Verizon’s go90 platform and associated
content, severance charges of $339 million, and acquisition and
integration-related charges of $120 million, primarily pertaining
to Oath.”

Verizon beat profit estimates on Tuesday, with net income
of $4.12 billion, or $1 per share.

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