Verizon loses 41K FiOS pay-TV subs in Q2 as strike takes toll

Fresh off its $4.83 billion takeover of Yahoo, Verizon (NYSE: VZ) said it lost 41,000 FiOS video subscribers in the second quarter, as a seven-week CWA and IBEW worker strike impacted Verizon's ability to perform new installations and hurt its wireline business overall.

Verizon also lost 13,000 FiOS high-speed internet customers in the quarter. 

"When we settled with the representative employees, there was a large backlog of installations," said Verizon CFO Fran Shammo during this morning's earnings call with investors. "As we sit here today, it's back to normal. But during the strike, we didn't do any advertising. It takes 30-60 days to ramp that up. We feel like we'll be back in stride by the fourth quarter."

Verizon's wireline business ended the quarter with an operating loss of $463 million. 

The slowdown in Verizon's wireline business was reported amid the backdrop of the company's big new media acquisition, Yahoo's U.S. internet business. 

Matching it with the $4.4 billion Verizon spent last year to acquire AOL, Verizon Chairman and CEO Lowell McAdam called the Yahoo buy an "exponential leap" in terms of Verizon's media business capabilities. 

"We have heard advertisers say to us they have more ads to place than places to put them," McAdam said. "We'll be one of the few who can deliver advertising across the home and across the mobile internet."

Describing Verizon's evolution into a powerful digital media company, McAdam said the company is particularly excited about acquiring Yahoo's capabilities in the area of sports.

He said he's had conversations with NFL Commissioner Roger Goodell and NBA Commissioner Adam Silver in recent weeks, attempting to figure out "what we can do with their content not only in-season but out of season. The networks and their sports channels see an opportunity to partner with us. They may have NF rights or NBA rights. They may look to us to stream games."

He called the Yahoo purchase "a waterfall of content moving down through our platforms."

"A lot has been made about how we are going to challenge Google and Facebook," McAdam added. "We're a small player today relative to them. All we need to take a small portion of the market and we'll be a success."

Said MoffettNathanson analyst Craig Moffett: "Verizon is hoping that one plus one plus one equals … well, if not four, then at least three and a half. The strategy is to make Yahoo's advertising inventory worth more — perhaps dramatically more — by enhancing it with location-based data about wireless users and selling it more efficiently and effectively using AOL's ad tech and ad sales force. It's a good story, and an easy one to tell."

For more:
- read this Verizon earnings release

Also read: Tracking pay-TV earnings in Q2 2016

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