Verizon in ‘perfect position’ to secure content partners, CEO says

Lowell McAdam Verizon
Verizon CEO Lowell McAdam (Verizon)

Verizon is doubling down on its rhetoric around video and its plans to be a network partner for programmers and not a content owner or producer.

Verizon CEO Lowell McAdam said that when he and future Verizon CEO Hans Vestberg went to Sun Valley to meet with “all the major content providers” and show them how 5G networks will improve capacity and latency, their eyes lit up about what’s possible.

“It’s our belief that we’re positioned perfectly to have the partnerships that we need to be successful. We’re not going to be owning content so we’re not going to be competing with other content providers. We’re going to be their best partner from a distribution perspective and I think that makes great sense for the company going forward,” McAdam said during today’s second-quarter earnings call.

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McAdam’s comments today seemingly align with reports that Verizon is seeking out partners for live TV in cities where it’s planning to launch 5G service this year. According to Bloomberg, Verizon is leaning toward teaming with Apple or Google for live TV to go along with 5G services in Los Angeles and Sacramento.

Either Apple or Google could make for an interesting partner for Verizon. Apple has been busy since last year assembling a team of veteran TV executives and amassing a slate of original series, but the company has yet to reveal how it plans to distribute its new wealth of content. Google has been doing original programming as well for its YouTube Premium service and it has been growing its live streaming TV service YouTube TV.

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McAdam acknowledged that video is the major driver of traffic on Verizon’s network today and that it will only go up over time, but said linear TV is no longer a big part of the plan for Verizon.

“We’re not fans of linear but I’m not trying to criticize anyone else’s strategy here. It’s just the fact of the assets we have and the investments that we want to make. It’s much better in our view to do digital so we’re skating to where the puck is going,” McAdam said.

Verizon lost another 37,000 FiOS video subscribers this quarter amid mounting pressure from cord cutting. But Verizon’s video losses weren’t strictly from its declining traditional TV service. Go90, the company’s failed mobile video experiment that was shut down last month, was the primary contributor toward a $658 million pre-tax charge for product realignment this quarter.

With Go90 out of the picture, the focus of Verizon’s digital video and content strategy now falls squarely on Oath, the company born out of its combined AOL and Yahoo acquisitions. Recent reports have suggested that Oath could be spun out of Verizon but McAdam threw cold water on that notion.

“The questions around Oath … I don’t know where they’re coming from. There’s no intention of spinning out Oath. We see the synergies we expected to see and we see the future we had hoped for,” McAdam said.

Verizon confirmed that integration efforts at Oath are on schedule to be wrapped up in the second half of this year.