Verizon’s Content Strategy? Focus on Mobile and Stick With Sports …

By on Mar 2, 2017 in Mobility Strategy |

As rival ATT (T) doubles down on legacy film and TV with the purchase of Time Warner (TWX) , Verizon (VZ) CFO Matt Ellis said Tuesday that the telecom plans to stick with the short-form content and sports that it has run on its go90 mobile streaming service.

“We don’t believe that we need to own the traditional, linear TV content,” Ellis said regarding programmed cable networks, at the Morgan Stanley Technology, Media Telecom Conference in San Francisco. Verizon’s focus is on the type of media that people watch on their phones, he added, and wants to own rights to some of the content that it streams over its mobile network.

Verizon is closing the purchase of Yahoo!  (YHOO) for the reduced price of $4.48 billion in cash, which will play into its mobile strategy. While Verizon expects to close the deal in the second quarter, Ellis said the benefits of combining Yahoo with AOL will start to kick in next year. Verizon has struck mobile streaming deals with the NFL and NBA, and invested in digital content assets such as AwesomenessTV.

Ellis’s comments echo Verizon’s running guidance that it does not need to to buy traditional video outlets, and casts doubt on the thesis that it will make a bid for Charter Communications (CHTR) .

There is logic to Verizon buying Charter. A deal would give Verizon $11.5 billion in net operating losses that could reduce the telecom’s tax bill for years to come, Macquarie analyst Amy Long noted in a recent report. It would also add thousands of miles of fiber and 16.8 million video subscribers. All together, Yong estimates, the savings and other benefits would total $1.5 billion per year.

Charlie Ergen’s Dish Network (DISH)  could be a more likely partner, however, Yong noted. “Verizon’s spectrum needs will likely put Dish ahead of Charter in terms of MA,” she wrote. “The deal is less about synergies and more about its 80MHz of spectrum, which would shield Verizon from future spectrum purchases and help it regain its network advantage.”

On Monday, Deutsche Bank raised its price target for Dish by $1 per share to $103, citing the value of its wireless licenses and the likelihood of “industry-wide strategic activity” once a quiet period linked to the Federal Communications Commission’s spectrum auction ends in six to seven weeks. The FCC bars talks between auction participants to prevent collusion on bids.