Verizon's CFO: Custom TV will 'refresh' to comply with programming contracts
Verizon (NYSE: VZ) CFO Fran Shammo said his company will make changes to its FiOS Custom TV product, which granularly controls which programming networks customers receive in their video service.
"We're going to refresh it so that we're in compliance with our contractual relationships [with programmers]," Shammo told investors during Verizon's fourth-quarter earnings call Thursday.
Shammo didn't give details as to what the changes might entail. He also wouldn't comment on ongoing litigation with the Walt Disney Company's ESPN division, which sued Verizon last year claiming the Custom TV bundling strategy violated the media company's carriage agreement with Verizon.
Custom TV debuted in the spring of last year, allowing customers to essentially build their own channel lineup based on modular stacks of genre-themed program packages. Executives for ESPN, which was put in the optional "sports" pack, were unhappy that their channels were not available in a base tier distributed to every home.
Shammo said that one-third of new FiOS video customers now opt for Custom TV. This has led to an overall trend of what Shammo describes as "cord shaving." And new customers are increasingly opting for broadband-only packages, he added. But there doesn't appear to be a trend line of existing customers ditching video services at Verizon.
"We do see customers getting rid of voice, but keeping video and Internet," he said.
Verizon added 20,000 video customers in the fourth quarter, ending 2015 with 5.8 million FiOS pay-TV subscribers.
Shammo gave few details about the company's new mobile video service, Go90. He did say that profitability for the platform, which is supported by programmatic ad sales wherewithal acquired during Verizon's $4.4 billion purchase of AOL last year, is at least two years away.
"Right now, we're focused on growing viewership, not necessarily profitability of the product," Shammo said.
For the fourth quarter, Verizon reported total operating revenue of $34.3 billion, up 3.2 percent over the same period of 2014. Revenue from FiOS operations grew 6.8 percent in the quarter to $3.5 billion.
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