A voluntary separation program that will see 10,400 workers exit by June 2019 are expected to result in a severance charge of between $1.8 billion and $2.1 billion.
In an SEC filing, the telecom giant cited “increased competitive and market pressures throughout 2018” and conceded that Oath “has also achieved lower than expected benefits” from combining Yahoo and AOL.
One positive noted in the filing is a one-time $2.1 billion tax benefit stemming from a restructuring of the company’s wireless division.
The accounting moves correlate with new leadership. Hans Vestberg took over from Lowell McAdam as CEO on August 1, with K. Guru Gowrappan becoming CEO of the media unit two months later. They are trying to turn the battleship, which for years had followed an AT&T-like path into media, to the point of holding merger talks with traditional media companies. One signature venture from that era, the loss-making streaming service Go90, has already been scrapped and Vestberg has been tightening the company’s focus to 5G and mobile services.
Executives’ view of the media sector was made abundantly clear when Verizon reported its third-quarter results. The company at the time said it expected “relatively flat” Oath revenue in the near term and did not expect to hit $10 billion in revenue in the segment by 2020, undershooting a previous internal forecast.
Tim Armstrong, who ran Oath and AOL prior to its acquisition by Verizon, recently announced his exit from the company.