Verizon, Redbox JV launching in August; telco expects better content deals

Verizon's (NYSE: VZ) joint venture with Redbox is launching in August, CFO Fran Shammo said during the Deutsche Bank Media & Telecom Conference. He also said the telco hopes to use the new business as leverage to push content players to lower prices for content on its FiOS TV service and to get broader cross-platform rights.

The initiative, which was announced earlier this month, will combine DVD rentals from Redbox's kiosks with "a new content-rich video on-demand streaming and download service from Verizon," which will control 65 percent of the business.

The JV, said Shammo, brings a number of factors into play for Verizon, in addition to giving it an over-the-top challenger to Netflix (Nasdaq: NFLX) and a hedge against other MSO-backed OTT plays, like the one announced last week by Comcast (Nasdaq: CMCSA). One of the key factors, he said, is the additional weight it gives the telco when negotiating contacts for content.

"We were last to market and, obviously, the content providers made us pay a premium price for that," Shammo said. "And [sic] as now as we have built FiOS up to exceed some other carriers--we're now I think No. 5 in the nation on number of subs as far as a linear TV goes -- then you bring in the 100 million eyeballs from wireless.

"Now you bring in over-the-top play from Redbox. We are starting to see some major discussions with content providers on cost synergy...We're looking at this as a content play for all of our platforms, not just for one."

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