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Verizon: We'll Still Do Video Our Way

Despite junking its troubled mobile video service, Go90, this month, Verizon remains committed to making its mark on the digital video world.

Speaking on the company's second-quarter earnings call Tuesday, outgoing Verizon Communications Inc. (NYSE: VZ) CEO Lowell McAdam reiterated that unlike telco rival AT&T with its recent acquisition of Time Warner, Verizon does not intend to become a major content owner or producer to compete in the video business. Instead, he insisted that the big US telco will continue to pursue its unique vision of acting as an independent network partner for TV programmers and other content providers.

"It's our belief that we're positioned perfectly to have the partnerships that we need to be successful," McAdam said on the earnings call. "We're not going to be owning content, so we're not going to be competing with other content providers. We're going to be their best partner from a distribution perspective, and I think that makes great sense for the company going forward."

Verizon CTO Hans Vestberg, who will take over for McAdam next week, heartily concurred. "I feel good about the assets we have," he said. "We can partner with everyone. That's the model we have, and we're going to develop it."

Those comments jibe with recent news reports that Verizon is recruiting partners to deliver live TV programming to mobile subscribers in the four markets -- Sacramento, Los Angeles, Houston and one not yet named -- where it plans to launch 5G wireless service this year. According to those reports, Verizon is leaning toward teaming with either Apple or Google for live TV in those markets. (See Verizon Targets OTT Video at 5G Markets.)

On the earnings call, neither McAdam nor Vestberg offered any details on Verizon's video partnership plans. But McAdam noted that video is the major driver of traffic on Verizon's mobile network today and that this will only increase over time. He also noted that, once again unlike AT&T Inc. (NYSE: T), linear TV is no longer a big part of Verizon's video vision.

"We're not fans of linear, but I'm not trying to criticize anyone else's strategy here," he said. "It's just the fact of the assets we have and the investments that we want to make. It's much better in our view to do digital, so we're skating to where the puck is going."

With the failed Go90 venture about to fade to black, Verizon is focusing its digital video and content strategy on Oath, the unit that Big Red created by merging its AOL and Yahoo subsidiaries. Fielding questions from analysts, company officials dismissed recent reports that Verizon might spin out Oath as a separate company and said they remain on track with plans to wrap up the integration of Oath in the second half of the year.

"The questions around Oath," McAdam said. "I don't know where they're coming from. There's no intention of spinning out Oath."

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Meanwhile, Verizon continues to lose video subscribers because of continued cord-cutting by consumers. The company reported shedding 37,000 Fios Video subs in the second quarter, a deterioration from the 15,000 video subs it lost in the year-ago period. That leaves Verizon with a bit under 4.6 million video customers, down 106,000 from a year ago.

Also on the video front, Verizon recorded a pre-tax charge of $658 million, largely due to the shuttering of Go90 this month. In late June, Verizon announced that it would shut down Go90 after the nearly three-year-old service never really caught on with its mix of short-form original videos, live programming and licensed content. Go90's operations are now being combined with Oath, the digital media service formed from the combination of AOL and Yahoo. (See Verizon's Go90 Shakes Hands With Eternity.)

As usual, Verizon fared much better on the broadband front, adding 43,000 Fios Internet subscribers in the spring quarter to boost its total to nearly 6 million at the end of June. With fiber lines now extended to more than 50 markets, the company also revealed plans to offer gigabit service over fixed-wireless networks in its 5G markets, starting later this year. For more on this, please visit our sister site, Broadband World News. (See Verizon Views 5G as Broadband Bonanza .)

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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