Verizon Wants $1B Off Yahoo Bill – Report

Verizon is said to be demanding $1 billion off the $4.8 billion it originally agreed to pay for Yahoo's core assets following recent scandals that have engulfed the Internet company.

The US telco wants to merge the Yahoo Inc. (Nasdaq: YHOO) assets with AOL Inc. (NYSE: AOL), another Internet property it acquired for about $4.4 billion last year, so that it can more effectively compete against the likes of Google (Nasdaq: GOOG) and Facebook in advertising markets.

But just weeks after sealing a deal with Verizon Communications Inc. (NYSE: VZ), Yahoo was revealed to have suffered a massive hack in 2014 that affected as many as 500 million user accounts.

In the last few days, Yahoo is also reported to have colluded with US government authorities on a program that involved snooping on customers' emails.

In light of those developments, Verizon is now reported by the New York Post to be seeking a substantial reduction in the fee it pays for Yahoo's core assets.

The telco is also said to have put aside about $1 billion to fund "possible liabilities" connected with the email hack.

The news comes just a day after the Investor's Business Daily reported that Verizon was closing in on a $3.5 billion sale of data center assets to Equinix. (See Verizon Nearing $3.5B Data Center Sale to Equinix – Report.)

While spending heavily on Internet properties, the operator looks keen on reducing its asset base so that it can focus efforts on service-related activities. It has previously sold parts of its fixed-line business and a number of mobile towers.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

kq4ym 10/17/2016 | 2:07:58 PM
Re: Hardball Even with a 20% discountt in Yahoo's purchase price, it may take some doing to make this a go it would seem. But with all the buying and selling activitiy maybe some of that may pay off down the road for Verizon.
wanlord 10/10/2016 | 6:53:15 PM
Re: Hardball Most of the really strong talent at Yahoo has been poached by Facebook, Twitter, Google, Box, Dropbox, Uber, Apple, any many more over the years of bleeding. Whatever products they have that look great on paper won't have the people to support it. With VZ in the mix, they are more likely to jump ship. Even more so when VZ starts the cost cutting policies they practice in telco (no free lunch or coffee, the commuter busses and perks will be taken away over time). 
danielcawrey 10/10/2016 | 2:34:04 PM
Re: Hardball I'm not entirely convinced a pairing of AOL and Yahoo is really going to effectively compete against the likes of the tech elite. I just have a hard time believing the talent level is going to be able to achieve goals. An AOL-Yahoo combination sounds more like a media companies rather than a technology one. 
wanlord 10/7/2016 | 10:24:20 PM
Re: Hardball I am not sure how far they are in the contracts, but do they have any leverage? Can they just back out or are they using this as a way to try for breach of contract for not informing, and a way to back out of the deal because maybe someone finally realized this is a bad apple?
Mitch Wagner 10/7/2016 | 7:39:19 PM
Re: Hardball Seems like Verizon sees an opportunity and is taking it. I can just imagine the conversation around Verizon offices now:

"Should we ask for a a price cut on the Yahoo deal after those data breaches?"

"Why would we get a price cut about that? No company has ever paid a signficant penalty over data breaches."

"Still, doesn't hurt to ask. Worst that happens is they say no."

"Good point. How much?"

"Beats me. Billion dollars sound good?"

inkstainedwretch 10/7/2016 | 4:01:21 PM
Hardball There is no justification for the discount based on actual performance, past or future. Companies do incur operational expenses associated with cleaning up after a hack, but that can rightly be considered a deferred expense -- it was money they should have spent in the first place but didn't because there are zero consequences for not making those security investments until you have to.

But then there's public perception, and $1B isn't chump change even for Verizon.

-- Brian Santo
Sign In