Verizon Communications Inc. VZ reached an agreement to sell Tumblr to WordPress.com owner Automattic for a "nominal amount," The Wall Street Journal reported.
What Happened
Verizon acquired Tumblr as part of its 2017 acquisition of Yahoo's media properties to build its own digital and advertising presence. Verizon is now exploring ways to improve its media business, which has consistently fell short of expectations.
Tumblr hosts millions of blogs and was once worth more than $1 billion. The price tag on the asset sale is not material to Verizon, a source told WSJ. On the other hand, Automattic's purchase marks its largest ever in terms of both price and employees it will absorb.
Why It's Important
Verizon last year was hit with a $4.5 billion accounting charge related to its digital business unit. In addition, total revenue within the media group fell 2.9% in the most recent second quarter year-over-year to $1.8 billion.
The poor performance prompted management to say during the second-quarter conference call it remains dedicated to news, finance, sports, entertainment and mail platforms within the media business, WSJ wrote. The remaining properties include highly visible properties like HuffPost, Yahoo Finance and other subscription services.
Automattic will look for ways to leverage WordPress.com and Tumblr to combine services and functionality.
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