Verizon Transforms To Contend In Silicon Valley After acquiring Yahoo, Verizon ranks third in digital advertising and is a major player in media and tech. It wants to play in the Silicon Valley sandbox — but don't expect a full transformation yet.

Verizon Transforms To Contend In Silicon Valley

Verizon Transforms To Contend In Silicon Valley

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After acquiring Yahoo, Verizon ranks third in digital advertising and is a major player in media and tech. It wants to play in the Silicon Valley sandbox — but don't expect a full transformation yet.


Verizon isn't just a telephone company anymore. Over the last two decades, it's gone from a child of the Bell monopoly to a parent of tech companies AOL and Yahoo. It wants to be a leader in digital advertising, but don't expect a full transformation from the telecom giant quite yet. NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: If you walk around your city or town and keep your eye to the ground, you'll start noticing round metal lids embedded in the street. That means underneath is an important utility. It's usually marked water or sewer, but some, like this one in Washington, carry the relic logo of a bell. These marks the backbone of America's telecommunications, and much of it belongs to Verizon. It's the country's largest phone company - at least, that's how you may think of Verizon, a child of a 20th-century phone monopoly. But here's what else belongs to Verizon.


UNIDENTIFIED MAN #1: Hello, and welcome to TechCrunch.


UNIDENTIFIED WOMAN: Now with HuffPost Live, you're invited...

SELYUKH: TechCrunch, Engadget, Huffington Post - and then there's this.


UNIDENTIFIED MAN #2: From executive producers Ben Affleck and Matt Damon....

SELYUKH: It's a reality show, "The Runner," on Verizon's mobile video app go90.

Verizon has been slowly sprawling into digital media. It bought several video streaming companies - AOL, now Yahoo. It's also a co-owner of Complex Media, which started as a skater and sneaker culture outfit and is now big on hip-hop coverage. It has a stake in Seriously.TV, which is a politics and comedy kind of site; in Rated-Red, which has a youth-in-the-heartland demographic; and in AwesomenessTV, which makes series like "Royal Crush" and other videos for young women.


ALYX WEISS: This is 20 Ways to Deal with Your Boobs.

ALEXIS ZALL: These guys right here.

SELYUKH: All this is Verizon's effort to become a top global media company, as CEO Lowell McAdam recently told investors.


LOWELL MCADAM: We see tremendous opportunity in the digital video marketplace, which has an estimated addressable market of $180 billion by 2020.

SELYUKH: And the reason for this expansion is actually pretty pragmatic.


MCADAM: Wireless in the United States is now a shrinking business.

SELYUKH: Craig Moffet is an analyst at MoffettNathanson.

CRAIG MOFFET: Verizon is, I think, rightly recognizing that trying to constantly extract more from the consumer for their service is pushing on a string.

SELYUKH: For years, Verizon and other wireless carriers had a growing stream of income as they charged more for our increasing use of data. But now that just about everyone has a smartphone, we keep using more data, but its price is falling. Moffett says bills are going down, not up. In July, for the first time in six years, Verizon reported a decline in revenue. So the company needs more sources of income.

MOFFET: If you're going to get more revenue per user, it's not going to come from the user him or herself. It's going to have to come from someone else. Well, who is that someone else? That someone else is almost certainly going to have to be advertisers.

SELYUKH: Verizon's $5-billion bargain purchase of Yahoo will instantly make it the third largest player in digital advertising. But the wireless carrier is breaking into a market completely dominated by Facebook and Google. And they're in a different league - they have bigger piles of cash, less regulation and don't deal that much with physical things like maintenance of cables or leases on cell towers.

MOFFET: Fundamentally, Verizon is not a Silicon Valley startup, and you can't pretend that it is.

SELYUKH: Verizon of 2016 is not your father's phone company. But its DNA still runs through the wires beneath those metal lids. Alina Selyukh, NPR News, Washington.

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