Verizon Loses 53,000 Pay TV Subscribers, Strikes YouTube TV Partnership

Hans Vestberg-Getty-H 2018
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The telecom giant, led by CEO Hans Vestberg, posts its latest financials.

Telecom giant Verizon on Tuesday said it lost 53,000 net pay TV subscribers for its Fios video service in the first quarter, compared with a loss of 22,000 in the year-ago period.

Fios competes with cable and satellite TV services. The subscriber losses were "continuing to reflect the shift from traditional linear video to over-the-top offerings," Verizon said.

Its broadband service added 52,000 subscribers in the first quarter, compared with 66,000 in the year-ago period.

Verizon, led by CEO Hans Vestberg, had for some time planned to launch a live TV streaming service to keep pace with young wireless users who are cord cutters or cord nevers, but it has since decided to offer other over-the-top (OTT) services via its platform. 

In that vein, the company on Tuesday unveiled a partnership with Google's YouTube TV streaming service, serving as a reseller. The companies didn't disclose pricing or other details, but said "Verizon will also offer unique, high-value YouTube TV promotions to customers across platforms" including Fios TV and Verizon's wireless services. 

Vestberg on Tuesday's earnings conference call said the YouTube deal offers "optionality" for Verizon customers. "As we said from the beginning, when we said we decided not to pursue our own investment in OTT, we will have partners." He added that Verizon customers would have access to a "competitive offering." 

Management has in the past reiterated that Verizon isn't eyeing any major content mergers or acquisitions to increase scale against rival phone and digital players. Vestberg reiterated on Tuesday in the context of the YouTube deal that "we are focusing on doing the network, we are doing the platform, and we are doing the integration, but we are not taking the investments of a TV platform, nor for the content."

After its acquisitions of AOL and Yahoo, Verizon created a new division, Oath, which was then expanded further to become Verizon Media and encompass all of its media and advertising businesses. For the first quarter, Verizon Media revenue fell 7.2 percent from the year-ago period to $1.8 billion. "Declines in desktop advertising continue to more than offset growth in mobile and native advertising," the firm said.

In January, Verizon Media Group, the umbrella organization that includes AOL, Yahoo, TechCrunch, HuffPost and Tumblr, said it was laying off 7 percent of its staff, or 800 employees, as it focused on its cellular business. Verizon Media CEO Guru Gowrappan said then that the priorities going forward were to grow the group's mobile and video products, increase usage of business-to-business platforms and expand its video supply and distribution. Among the changes that Gowrappan has instated since he took over for Tim Armstrong in October are the integration of the Yahoo Mail and Yahoo Home teams.  

Verizon had in December said that it was taking a charge of $4.6 billion for its Oath unit in the fourth quarter.