Stung by cord-cutting like other big US pay-TV providers, Verizon is putting more of its video eggs in the digital media basket.
Verizon Communications Inc. (NYSE: VZ) reported Tuesday morning that its fiber-fed Fios unit lost video subscribers for the fourth straight quarter in the fall, as well as the fifth time in seven quarters. Fios Video shed 29,000 subscribers in the fourth quarter, as opposed to a gain of 21,000 subs in the prior-year period. As a result, Verizon closed out 2017 with just over 4.6 million video subs, down 75,000 subs for the year.
The video sub loss came despite continuing, albeit slowing, gains by Verizon's companion Fios Internet service. It added 47,000 data subscribers in the fourth quarter, marking its sixth straight quarterly gain. The quarterly performance capped off a year that saw Fios notch nearly 200,000 new residential data subs, boosting its customer total to almost 5.9 million. For more on this development, see our sister site, Broadband World News. (See Verizon Fios Slows Growth Pace.)
But Verizon executives mostly shrugged off the growing erosion of their legacy pay-TV customer base, which is part of a much broader industry-wide trend. Instead, speaking on the company's earnings call earlier today, they played up the company's advances on the digital media front with its new Oath business.
The company reported that Oath -- which combines the online assets of the former AOL and Yahoo digital businesses -- generated $2.2 billion in revenues in the fourth quarter, up roughly 10% from its third-quarter haul. It credited the surge to "increased customer advertising spending during the holidays," adding that it expects "a normal seasonal trend in Oath revenues" (read that as a decline) in the first quarter of the new year.
Citing Verizon's recent mobile video streaming deals with both the NFL and NBA, McAdam said the company is making "significant progress" with Oath as it seeks to build the new brand into a news, sports, finance and entertainment powerhouse on the Internet. He said the two sports-league streaming deals are part of Verizon's quest to "become the first screen for fans of live sports." (See Verizon Teams With NFL for Live Streaming and Verizon Does New NBA Distribution Deal.)
As he has before, though, McAdam all but ruled out any moves by Verizon to buy a big content company, as Comcast Corp. (Nasdaq: CMCSA, CMCSK) did with NBC Universal several years ago and telco rival AT&T Inc. (NYSE: T) is frantically trying to do with Time Warner Inc. (NYSE: TWX) right now. Despite rumors swirling around the market, the Verizon CEO said he has no big media deals in the works.
"We think being a great partner, being able to monetize the advertising and being independent is a great way to play," he said.
Overall, Verizon posted fourth-quarter net income of $18.8 billion on revenues of $34 billion -- up 5% year-on-year. For all of 2017, the company reported revenues of $126 billion. (See Verizon Capex to Stay Flat Despite Commercial 5G Launch in 2018.)
— Alan Breznick, Cable/Video Practice Leader, >Light Reading