Verizon Loses 84,000 Pay TV Subscribers, Virus Crisis Hits Media Unit

Verizon CEO Hans Vestberg
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Verizon CEO Hans Vestberg

Revenue at the media unit, which includes the likes of Yahoo and HuffPost, fell 4 percent in the first quarter, "driven almost entirely by COVID-19 impacts."

Telecom giant Verizon on Friday reported that it lost 84,000 net pay TV subscribers for its FiOS consumer video service in the first quarter, compared with a loss of 55,000 in the year-ago period and a loss of 51,000 in the fourth quarter.

The company cited "the ongoing shift from traditional linear video to over-the-top offerings," saying it ended March with 4.07 million consumer video connections.

Verizon reported a 68,000 decline in postpaid phone subscribers, which are users who pay a monthly bill, amid store closures affecting about 70 percent of its stores due to coronavirus lockdown measures led to a "significant drop" in customer activity. However, the company added 59,000 FiOS broadband connections.

Management said it started seeing big shifts in consumer behavior starting around mid-March, including fewer new mobile sign-ups, but also less user churn in some areas, as well as increased broadband and wifi usage in homes.

This earnings season is covering results for companies' first quarter of 2020, which includes about a month worth of coronavirus pandemic fallout. Wall Street will listen closely for what management teams say about the financial and operational impact beyond the first quarter though.

Verizon had last month said that U.S. video game usage during peak hours went up 75 percent over the first week of the pandemic quarantine, while video streaming increased by 12 percent. 

Verizon, led by CEO Hans Vestberg, did not say on Friday how many of its users have taken advantage of the telecom giant's deal with Walt Disney's Disney+ streaming service. Management had previously said that the deal has exceeded the firm's expectations. Disney recently said that the streaming service had hit more than 50 million subscribers. 

For all of 2019, Verizon lost 225,000 Fios video subscribers in its core consumer unit, compared with 171,000 in 2018. Fios competes with cable and satellite TV services.

The Verizon Media unit, which includes the likes of Yahoo and HuffPost, posted revenue for the first quarter of $1.7 billion, down 4 percent. The firm said that was "driven almost entirely by COVID-19 impacts," mentioning weaker advertising trends in March and adding: "Prior to the COVID-19 crisis, year-over-year revenue trends continued the steady improvement seen in full-year 2019. Verizon Media has seen increased levels of customer engagement on its platforms, but advertising rates have declined in the current environment."

One analyst suggested that the media unit's second-quarter revenue could fall 20 percent-30 percent, but management didn't provide any specific guidance. But executives mentioned the firm is also working to control and manage costs amid the virus crisis. 

Verizon in late March unveiled a way to bring together digital entertainment and philanthropy while honoring social distancing guidelines. Pay It Forward Live, a new weekly streaming series that includes music, games, comedy and other content, to support small businesses that have been affected during the coronavirus pandemic launched with an exclusive performance from veteran rocker Dave Matthews.