Verizon Finally Set to Seal Yahoo Deal Worth $4.5 Billion

The merged business comprising Verizon and Yahoo will be called Oath.

Verizon eyes the digital advertising business by merging entities with Yahoo. (Photo: AP)

Yahoo's shareholders on Thursday approved the $4.5 billion sale of its key businesses to Verizon. The deal is expected to close by Tuesday. AOL and Yahoo will cut 15 percent of the 14,000 workers they now employ, or about 2,100 jobs, said a person familiar with the matter who requested not to be identified discussing the cuts.

However, what’s worrying is that about 2,100 jobs are on the line, as Verizon prepares to combine Yahoo and AOL for a digital advertising offensive.

Verizon has a simple goal in buying Yahoo's core business: It wants to challenge Google and Facebook in the huge and lucrative field of digital advertising. But Verizon faces its own challenge in doing so, given that it will be competing against a slew of other companies also looking to break in.

The combined business, to be called Oath, will expand its news, sports, entertainment, finance and lifestyle coverage. Like everyone else, Oath will focus on video and mobile, where consumers increasingly spend their time online.

Verizon has programs that use mobile-customer data for targeted ads and may combine that with data gathered by AOL and Yahoo. Verizon says customers can choose whether to participate.

Yahoo and AOL are “positioned to do better together than apart

Brian Wieser, analyst, Pivotal Research Group

But he is setting the bar low. While Verizon talks of growth from the deal, Wieser said "not declining would be a success. Five years from now, if the combined entity were the same size as it is today, I would consider that to be successful."

AOL and Yahoo together provide a much-smaller No 3 in the US for advertisers looking to reach lots of people. But even if Verizon's goal is to just be happy at No 3, there are several much smaller players that also draw advertisers.