Verizon Loses 46,000 Pay TV Subs in Fourth Quarter

Verizon CEO Hans Vestberg
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Verizon CEO Hans Vestberg

The telecom giant, led by CEO Hans Vestberg, also confirmed a $4.6 billion charge for its Oath unit.

Telecom giant Verizon said Tuesday that it lost 46,000 net pay TV subscribers for its Fios video service in the fourth quarter, compared with a 29,000 loss in the year-ago period.

The telecom giant in December had said it was taking a charge of $4.6 billion for its Oath unit in the fourth quarter, saying "the goodwill balance of the Oath reporting unit was approximately $4.8 billion prior to the incurrence of this impairment charge." It confirmed the charge on Tuesday.

Verizon, led by CEO Hans Vestberg, also said that its pay TV subscriber drops have continued to "reflect the shift from traditional linear video to over-the-top offerings." The company ended 2018 with 4.5 million Fios video subscribers.

Vestberg during a morning analyst call said Verizon would need to keep serving Fios pay TV customers with big cable packages, even as others opt for less expensive Internet TV services.

"We'll of course over time create optionality for our customers to choose between different solutions for their TV viewing," he said. "Ultimately, we will see our customers have all the choices when it comes to how they want to consume video. We see the trends in the market."

Fios competes with cable and satellite TV services. Its broadband service added 54,000 subscribers in the fourth quarter, compared with 47,000 in the fourth quarter of 2017, to end 2018 with 6.1 million.

After its acquisitions of AOL and Yahoo, Verizon in 2017 created Oath, which encompasses all of its media and advertising businesses. Verizon's fourth-quarter media revenue reached $2.1 billion, down 5.8 percent from the year-ago period, but up from the third quarter "due to seasonal advertising spending."

Top Verizon executives during an analyst turned the spotlight away from their media plans to instead focus on the rollout of 5G wireless phone technology. 

Verizon CFO Matt Ellis said the Verizon Media Group, which includes brands like Yahoo, HuffPost and TechCrunch, had not been as much a contributor to overall earnings in 2018 as intended. "The assumption as we head into this year is they will make progress on the revenue line ... and that will change the earnings side as well," he told analysts. "They have some good plans for the business. We now need to execute against those."

Verizon has faced a challenging climate for its media businesses as they don't have the scale of Google or Facebook.

Verizon's quarterly profit came in at $2.07 billion, or 47 cents per share, down from $18.78 billion, or $4.56 per share, in the year-ago quarter. But adjusted for special items, earnings hit $1.12 per share, up from 86 cents in the year-ago quarter and ahead of the $1.09 Wall Street consensus expectation.

Jan. 29, 10:00 a.m. Updated with comments by senior Verizon executives made during a morning analyst call.