Verizon Said to Plan Online TV Package for Summer Launch

(Bloomberg) -- Verizon Communications Inc. has been securing streaming rights from television network owners in preparation for the nationwide launch of a live online TV service, according to people familiar with the matter.

The telecommunications giant plans to start selling a package with dozens of channels this summer, according to the people, who asked not to be identified discussing private information. The live, over-the-internet TV service would be a first for Verizon -- separate from go90, a YouTube-like streaming-video service aimed at teens -- and also independent of its FiOS home TV offer, the people said.

Verizon’s preparations highlight the growing pressure to provide a cheaper, smaller package of TV networks to viewers who are turned off by a glut of programming available on traditional cable packages. Dish Network Corp. introduced a similar service, Sling TV, two years ago, and AT&T Inc.’s DirecTV Now came out late last year. Sling’s basic package costs $20 a month, while DirecTV Now starts at $35 for 60 channels. Verizon’s will probably be similarly priced, the people said.

If the Verizon service is like Dish’s or AT&T’s, it’ll be accessible through an app on set-top boxes like Apple TV or Roku, and through phones and tablets. AT&T’s DirecTV Now subscribers aren’t required to be customers of its phone service, though users get a discount for signing up to both. It’s unclear if Verizon would have a similar model.

Rival Comcast Corp., the largest U.S. cable operator, has also been securing rights from cable networks to get the option to offer an online-TV business outside its cable territory, though the company has no current plans to go ahead with such a service, people familiar with the matter said this month.

Online Competition

A nationwide, online TV service from New York-based Verizon would compete not just against established pay-TV providers but against offerings coming this year from Hulu and YouTube. Much like Dish, Verizon has secured streaming rights while negotiating new contracts with programmers for its existing TV service, FiOS, the people said. In some cases, Verizon has even sought streaming rights ahead of contract renewals for FiOS, one of the people said.

In a recent statement announcing a contract extension with Verizon, CBS said the deal included rights for “future digital platforms, with specifics to be released at a later date.”

Close to 2 million people now subscribe to new TV packages delivered over the internet, according to analysts’ estimates and executives’ comments, boosting an industry that has struggled to attract new customers in recent years.

Companies that own cable networks, from Walt Disney Co. to Viacom Inc., have been jockeying for positions in the new online packages so that they can boost their subscriber totals.

Verizon’s FiOS service has 4.7 million subscribers, fewer than industry leaders Comcast, Charter, Dish and AT&T.

The phone company angered suppliers two years ago when it began selling Custom TV, a bundle that cost less and had fewer channels than most packages. The basic service excluded sports networks from Disney, 21st Century Fox Inc. and Comcast Corp.

Disney sued, arguing Verizon violated their contract. In February 2016 Verizon agreed to offer two low-cost bundles, including one with sports channels.

To contact the reporters on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net, Scott Moritz in New York at smoritz6@bloomberg.net, Gerry Smith in New York at gsmith233@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum