Jan 8, 2019

Verizon CEO: Media business needs to stand on its own

Ina Fried, author of Login

Verizon CEO Hans Vestberg. Photo: Steven Ferdman/Getty Images

Verizon CEO Hans Vestberg isn't ready to ditch the telecom company's media unit, but he tells Axios it will have to make money without leveraging data from the company's wireless and wireline subscribers.

Why it matters: This is a sharp departure from the company's original premise for buying Yahoo and AOL: that Verizon could use its detailed data on subscribers to take on Google and Facebook, which together dominate digital advertising.

In an interview with Axios, Vestberg says the former AOL and Yahoo businesses "need to survive on their merits."

  • Though he's mostly focused on 5G and the company's massive wireless and wireline businesses, Vestberg says he sees potential in the content operation.
  • Content is particularly strong in parts of Yahoo's operations in sports, finance and entertainment, which lend themselves to video programming, he says.
  • But he adds the company will prioritize the responsibilities it has to those paying it for network services.
"We're not trying to mimic a Facebook or Google. We don’t think that's the right way to do that."
— Hans Vestberg

By the numbers: Verizon doesn't break out the profitability of its media business, but it said in November that the unit wouldn't meet its goal of becoming a $10 billion-a-year business by 2021.

  • Vestberg, who has been Verizon CEO for less than a year after 28 at Ericsson, says it's too soon to determine if there may be divestitures within the media business.

He has already started making other changes. Late last year, Vestberg implemented a strategy he calls "Verizon 2.0." The effort includes:

  • Shaking up the company's leadership ranks.
  • Reorganizing into 3 businesses: consumer, business and Verizon Media Group.
  • Outsourcing a chunk of the company's IT operations to Infosys.
  • Accepting voluntary buyouts from more than 10,000 workers.

Why? The changes are designed to help the company fully take advantage of the next generation of cellular technology. 5G is just starting to reach consumers, but over time has the potential to create whole new lines of business.

  • One of the earliest opportunities is to take the kind of network that Verizon is building for itself and sell a version to large businesses looking to speed up and automate their own corporate campuses, according to Vestberg.
  • Additional opportunities range from health care to smart cities, as 5G networks become more advanced and ubiquitous. Those areas require lots of wireless spectrum, dense networks and fiber — all of which Verizon has, he says.

One area where Verizon still has room to improve, Vestberg notes, is to take a more active role in the businesses that are built using its high-speed connections.

  • "Much of the innovation came on top of the network in 4G," he says. Customers still benefitted, but he would like to see Verizon get more involved this time around.
  • That doesn't necessarily mean the company needs to build every product, but "we need to be part of that innovation."

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