The collective value of digital media brands including Huffington Post, Yahoo and AOL, which once had a stock market capitalisation of more than $200bn (£158bn), has been slashed to only $200m by their parent Verizon.
The US telecoms company has taken a $4.6bn charge on the goodwill value of Oath, the digital media subsidiary that houses properties including HuffPo, Yahoo and AOL, leaving it worth about $200m on paper.
In a filing with the Securities and Exchange Commission, the US stock market regulator, Verizon said it was writing down the value of Oath after a strategic review that resulted in the downgrading of financial projections for the business.
The write-down of the value of Oath, which Verizon put together in the hope of creating a viable rival to Google and Facebook with a target of $10bn revenues by 2020, provides further stark evidence of the tough conditions facing a whole generation of digital media companies.
It is also a far cry from the frothy excesses of the turn of the century dotcom boom, when AOL hit a peak stock market value of $222bn in December 1999, with Yahoo’s capitalisation topping $100m around the same time.
The following year AOL’s mega-merger with Time Warner created a $350bn business that was lauded as a visionary marriage of old and new media.
However, the deal has since been widely derided as one of the most disastrous mergers in corporate history and the two companies split in 2009, with AOL valued at about $3.5bn.
The year before that, Yahoo, still holding ambitions to fight back against the rise of Google and Facebook, spurned a $45bn offer from rival Microsoft.
Verizon bought AOL in 2015 for $4.4bn and two years later acquired Yahoo for $4.5bn.
A newer generation of digital media companies with hot prospects have also found themselves falling on tougher times over the past year.
Last month Disney wrote down $157m of its investment in Vice Media, the youth-focused upstart that had enjoyed a frothy $5.7bn valuation. Disney took a $400m stake in Vice in 2015 after investment by other traditional media companies including Rupert Murdoch’s 21st Century Fox and the advertising giant WPP.
BuzzFeed, the digital media company founded by Jonah Peretti, missed its revenues last year, coming in at $260m versus a planned $350m. About 100 jobs were cut and a planned stock market flotation was postponed.
In a recent interview, Peretti appealed to rivals such as Vice, Vox Media, which owns brands including Recode and The Verge, Group Nine and Refinery, suggesting that they should think about merging to create the scale needed to compete with Google and Facebook.
