Market Overview

Verizon Dumps Tumblr Two Years After Acquiring It

Verizon Dumps Tumblr Two Years After Acquiring It

Verizon Communications Inc. (NYSE: VZ) reached an agreement to sell Tumblr to 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 and Tumblr to combine services and functionality.

Related Links:

This May Explain Why Verizon Wants To Buy Yahoo's Properties

Verizon Reports Mixed Q2 Earnings


Related Articles (VZ)

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Posted-In: Automattic Tumblr Wall Street JournalNews Asset Sales Media Best of Benzinga

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