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New Verizon execs say old Verizon execs made a $5 billion mistake betting on AOL and Yahoo

And Verizon investors seem fine with that.

Verizon CEO Hans Vestberg speaks onstage during a press conference on the first day of the Mobile World Congress 2015
Verizon CEO Hans Vestberg, back in 2015 when he ran Ericsson as chief executive
David Ramos / Getty
Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

It was easy to predict that Verizon would end up regretting the $10 billion or so that it had invested in AOL and Yahoo.

The two companies used to define the internet, but by the time the phone company bought them, they were long past their prime. And no one except Priceline has ever revived a faded consumer internet company — once it’s done, it’s done.

Now Verizon has formally acknowledged that it, too, can’t turn AOL and Yahoo around and has written off $4.6 billion of the money it spent buying the two properties. The playbook from here on out calls for a series of staff cuts and asset sales, followed by more writedowns, followed by more cuts, etc.

This one contains multiple teachable moments. Just wishing that there was an alternative to the Facebook/Google advertising duopoly doesn’t make it so, for instance. Then again, Facebook and Google can look at the demise of two of the internet’s most powerful companies and remind themselves that this could be their fate, too.

One particular lesson you can take from this even if you’re not an internet giant, past, present or future: Giant megadeals don’t belong to the companies that make them. They belong to the executives that make them. And if those execs leave, the deals can go, too.

Again, this has been easy to see for a while at Verizon. Lowell McAdam, the Verizon CEO who pushed the company into media over the last few years, left this summer. And his replacement, Hans Vestberg, is a guy who cares about boosting Verizon’s wireless business, not building a media one. (Vestberg didn’t even try to feign enthusiasm about his media assets when interviewed at Business Insider’s Ignition conference last week.)

Vestberg’s ascent was followed by the departure of Tim Armstrong, the man who sold McAdam on the AOL/Yahoo combination. And that was that.

As I put it a few months ago, when Verizon was still insisting that 1+1=3 and that it was psyched to own AOL/Yahoo:

* Guy who built media empire is leaving.
* Guy who sponsored the media empire builder has left.
* Media empire is a small piece of a company that doesn’t seem interested in building media empires anymore.
Draw your own conclusion.

But if you didn’t want to take my word for it, you can now take Verizon’s. The company’s SEC filing this morning duly notes “competitive and market pressures” that made AOL and Yahoo worth less than it thought. But the real reason the company has rethought the whole thing, Verizon says, is that new people are running Verizon:

“Effective August 1, 2018, Hans Vestberg became Chief Executive Officer of Verizon, and effective October 1, 2018, K. Guru Gowrappan was appointed Chief Executive Officer of the Media business. In connection with Verizon’s annual budget process in the fourth quarter, the new leadership at both Oath and Verizon completed a comprehensive five-year strategic planning review of Oath’s business prospects [italics added] resulting in unfavorable adjustments to Oath’s financial projections.”

Translation: We just got here! So don’t blame us. Blame the other guys, who conveniently aren’t around to take the blame.

And Verizon investors, who didn’t complain about any of this a few years ago, are happy to take the new guys up on their offer. Verizon shares are up about 2 percent this morning.

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