NEWS ANALYSIS — Verizon’s short-lived attempt at over-the-top video targeting millennials on wireless devices has a price tag: $997 million.
The telecom July 24 revealed the pre-tax charges in second-quarter (ended June 30) fiscal results, which include $339 million in severance charges.
The oddly named ad-supported mobile-centric video app launched in 2015 with much fanfare and hundreds of millions of dollars invested.
One of the app’s first (and expensive) series was a reality-competition show produced by Ben Affleck and Matt Damon, dubbed “The Runner” – which had the misfortune of bowing at the same time of the global Pokémon Go craze.
Go90 did score a creative hit with Kobe Bryant’s Oscar-winning short film Dear Basketball.
The end of Go90 underscores Verizon’s (and exiting CEO Lowell McAdam) failure to create a standalone streaming video platform capable of competing against Netflix, Amazon Prime Video, Hulu — or even OTT video.
Earlier this year, the telecom folded Go90 into its Oath platform, which includes ’90s relics AOL and Yahoo, in addition to HuffPost, Engadget, Tumblr and TechCrunch.
Indeed, Verizon reported acquisition and integration-related charges of $120 million, primarily related to Oath in Q2.
Separately, Verizon disclosed it lost 37,000 net Fios Video subscribers in Q2, citing ongoing consumer cord-cutting of pay-TV service for competing over-the-top video platforms not named Go90.
The telecom lost 15,000 net Fios Video subs during the previous-year period. Through the first half of the year, Fios Video shed 59,000 net subs compared to 28,000 subs last year.
In total subscribers, however, Fios Video ended Q2 with 4.56 million subs – down 106,000 subs from 4.666 subs last year.
Reflective of consumer adoption of OTT video, Verizon said Fios broadband added 43,000 net subs, down 12.2% from 49,000 broadband sub additions last year. Through the first six months, broadband subs increased nearly 30% (109,000) from 84,000 last year.
Verizon ended the period with 5.959 million broadband connections, up nearly 4% from 5.737 million connections last year.
Perhaps sensing his unexercised stock options, McAdam – who regularly skipped fiscal calls in favor of kowtowing investor events – said Verizon is “extremely well-positioned” for the future.
“Our financial and operating results for the first half of 2018 were strong, as evidenced by service revenue, earnings and operating cash flow growth delivered in a highly competitive marketplace,” he said.
McAdam conveniently ignored Go90’s after-tax impact of about $900 million, or 20 cents per share.