Video is Yahoo’s big attraction for Verizon, says CEO McAdam

27 July 2016 | Alan Burkitt-Gray

Verizon CEO wants to use Yahoo acquisition to target $180bn digital video market

Verizon has bought Yahoo’s operations for $4.8 billion to allow it to compete with Facebook and Google in digital video, says CEO Lowell McAdam.

In an earnings call with analysts, McAdam said that Verizon sees “tremendous opportunity in the digital video marketplace, which has an estimated addressable market of $180 billion by 2020”.

He said that “today that marketplace is dominated by two brands” – taken to be a reference to Facebook and Google. “Content creators and advertisers are hungry for alternatives as the market expands for both in-home and mobile consumption. Verizon intends to be a significant player in this space.”

McAdam said that in the year since Verizon bought AOL for $4.4 billion “we have learned a tremendous amount about the video market and opportunities to grow in the future”. The team, led by Marni Walden, “is focused on integrating these assets and driving profitable growth by attracting viewers through great content, which, in turn, attracts advertisers by increasing the return on their advertising dollar”.

He added: “By acquiring Yahoo's operating business, we are scaling up to be a major competitor in mobile media. Yahoo’s operations provide a valuable portfolio of online properties and mobile applications, which attract over one billion monthly active consumer views.”

Both Verizon and Yahoo have sports assets, but he added that Yahoo Finance is “probably their strongest asset today”. He said: “We see ways that we can combine some of our assets and some of their assets – the TechCrunch, the Engadget, the Huffington Post – and we can drive a lot of visits to the site.”

McAdam said that “Yahoo’s operations complement AOL’s business, as well as our overall asset portfolio. The global scale, volume of customer analytics, and market reach of the combined assets will allow us to create long-term value in a less capital-intensive manner.”