Verizon, Straight Path Pay Record $614 Million FCC Fine

The Federal Communications Commission Feb. 28 announced that Straight Path Communications and Verizon Communications paid a $614 million civil penalty in connection with a January 2017 settlement regarding wireless spectrum.

The fine is the largest civil penalty ever paid to the U.S. Treasury to resolve a FCC investigation. The payment – and relinquishment of 20% of spectrum licenses – is on top of $15 million Straight Path previously paid to the U.S. Treasury.

The agreement was made prior to closure of Straight Path’s $3.1 billion sale and transfer of licenses to Verizon.

The settlement resolved an investigation into allegations Straight Path failed to properly use (or was sitting on) the spectrum it was awarded by the federal government – violating the government’s buildout and discontinuance rules in connection with about 1,000 licenses in certain millimeter wave spectrum bands.

High-frequency bands, or 5G, represent the next-generation of wireless technology.

Verizon and Straight Path entered into a merger agreement May 11, 2017 to transfer licenses, and on Jan. 18, 2018, the FCC’s wireless telecommunications bureau approved the transfer.

 

 

 

 

Dotcom Pioneers All in for NFL Thursday Night Football

The National Football League suffered through a controversy-plagued season, underscored by declining attendance and slipping TV ratings – down 13%.

But that isn’t stopping Twitter, Amazon, Google-owned YouTube and Verizon from upping bids for first-time multiyear streaming rights to the 2018/19 season of NFL Thursday Night Football, according to Recode.net.

With Fox Sports securing exclusive Thursday Night Football broadcast rights over the next five years for $3.3 billion – nearly 50% more than what NBC and CBS paid to split rights to 10 games last season, expect online properties to dig deep into the wallet as well.

Indeed, Twitter secured rights in 2016 for $10 million, a figure that ballooned to $50 million in 2017 for Amazon Prime Video.

While Verizon has select mobile streaming rights along with Fox, it could seek to expand them for its fledgling Oath platform. And YouTube, which is shipping the YouTube Red brand internationally, in addition to upping content selection (and pricing) for YouTube TV, is interested, CEO Susan Wojcicki told Recode’s Code Media confab this week in Huntington Beach, Calif.

But without deep-pocket market leader Netflix, which steadfastly declines any interest in live sports, dramatically up the bidding price, streaming rights should remain reasonably priced considering online viewership to Thursday Night Football pales in comparison to broadcast. An early season game between the Chicago Bears and Green Bay Packers generated 373,000 viewers on Prime Video, compared to 14.6 million for broadcast.

 

 

 

 

Verizon Melding Go90 Streaming Video Service Into Oath Platform

Verizon’s struggling mobile streaming video service, Go90, is being folded into the telecom’s Oath platform, which includes AOL, HuffPost, Engadget, TechCrunch, Tumblr and Yahoo, Tim Armstrong, CEO of Oath, told a technology group.

Speaking Feb. 13 at Recode’s Code Media confab in Huntington Beach, Calif., Armstrong admitted rollout of ad-supported Go90 had its share of challenges.

“We had two separate strategies, now it will be one strategy,” Armstrong said.

Launched in 2015 with much fanfare, Go90 offered select TV shows, movies, video clips and related media, including a reality TV series from Ben Affleck and Matt Damon.

The platform targeted millennial demographic, in addition to Gen. Z and gamers with mobile content that would not count against monthly data caps.

But challenges quickly surfaced as the platform struggled to gain traction in a market filled with myriad social media options, in addition to Netflix, Amazon Prime Video and Hulu.

Verizon CEO Lowell McAdam in 2016 admitted to obstacles with the service, including taking blame for over-hyping Go90 in the media and on Wall Street.

The platform reportedly laid off 155 staffers in January 2017, including GM Chip Canter, consolidating operations under Vessel, a separate platform founded by former Hulu CEO Jason Kilar.

“Go90 was a super ambitious project, which was essentially trying to start an Internet mobile video service from scratch,” Armstrong said. “The [Go90] brand will remain [for] I don’t know how long.”

Trump Looking to Nationalize 5G Development?

The federal government reportedly is considering nationalizing nascent commercial efforts in the development of a 5G mobile network under the guise of national security interests, among other factors.

According to Axios.com, which cited a National Security Council PowerPoint presentation regarding the issue, the feds would help expedite 5G development within three years in an effort to safeguard the nation’s burgeoning telecommunications network.

5G is about 1,000 times faster than the current 4G network and could enable the download of an HD movie in less than a second.

A 3G network has download speeds up to 384 Kbps, with 4G at 100 Mbps and 5G reportedly up to 10 Gbps.

Nationalizing a private and largely unregulated industry such as mobile communications would be unusual and run counter to the GOP-controlled small government Congressional mindset. Not to mention President Donald Trump.

Yet with China reportedly set to spend more than $400 billion on 5G, U.S. officials worry the pseudo Communist power could undermine similar efforts in the U.S. due in part to much of the technology being manufactured in China.

“[The government wants to] build a network so the Chinese can’t listen to your calls,” said one official as reported by Reuters.

While the report suggested private 5G development remains an option, it is believed rollout could take longer.

Trump reportedly will weigh in on the matter sometime this year.

Then again, he could call Verizon, which is rolling out 5G in five major U.S. cities in the second half of the year — the first wireless carrier to do so.

Verizon aims to harness 5G technology with its new Oath platform, whose content brands include Yahoo, HuffPost, AOL, Tech Crunch and Engadget, among others.

“The next industrial revolution will be on Verizon’s [5G] network and will positively impact society like no technology we have seen before,” CEO Lowell McAdam boasted on the fiscal call.

Vice Chairman: Lionsgate ‘Very Interested’ in Third-Party Merger

Lionsgate is shopping – itself.

With AT&T’s $85.4 billion acquisition of Time Warner in regulatory limbo, and Walt Disney’s $52.4 billion acquisition of select 21st Century Fox assets, including 20th Century Fox, pending, big media mergers are on the mind of Michael Burns, vice chairman of Lionsgate.

With a $7 billion market cap, Burns says Lionsgate is a “pint-sized bite” for potential suitors compared to “800-pound” gorillas like AT&T. Speaking on CNBC, Burns reiterated the usual “enhancing shareholder value” mantra driving publicly-traded companies like Lionsgate to acquire or be acquired.

Burns was quizzed about the likelihood of Lionsgate merging with Verizon, Comcast, Amazon or possible reunified Viacom/CBS.

He said merging with a telecom such as Verizon could be a big deal, provided the telecom decided what businesses it wants to be in. Burns was alluding to Verizon CEO Lowell McAdam, who, on the fiscal call, said the telecom wasn’t looking at any M&A activity in the short-term.

Burns said he is very interested in the outcome of the DOJ’s antitrust lawsuit against the AT&T/Time Warner merger. The executive called Comcast’s $30 billion acquisition of NBC Universal in 2011 the deal of the century.

“Again, you have to show organic growth or you have to make acquisitions, like us, which would be a bolt-on acquisition for [Comcast],” Burns said.

He said Lionsgate is talking to other media companies “all the time to see if a deal makes sense.”

Merging with Amazon would seem realistic given the ecommerce behemoth’s 70 million Prime members and ongoing content deals between the two companies, including movies The Big Sick and Oscar winner Manchester by the Sea.

“We’re a customer of Amazon and we are doing a lot of business with them,” Burns said. “We think there is more and more to do with them.”

He said media companies, particularly in the tech space, have to decide whether they want to “build it” or “buy it” when determining how far ahead the competition is in the streaming and subscription business.

“We’re very interested in the consolidation space,” Burns said. “Obviously that’s very important to us.”

Verizon Eyes 5G Future as Fios TV Ups Sub Losses

Verizon Jan. 23 announced it plans to roll out 5G wireless functionality in upwards of five major cities in the second half of this year – the first wireless carrier to do so.

The technology should dramatically increase streaming video speeds, with 5G download speeds up to 10 gigabits-per-second compared to one gigabit-per-second for 4G LTE. The higher speed could result in downloading a HD movie in seconds.

Verizon aims to harness 5G technology with its new Oath platform, whose content brands include Yahoo, HuffPost, AOL, Tech Crunch and Engadget, among others.

The telecom, which recently inked license deals with the NBA and NFL, added 47,000 Fios high-speed Internet customers to end the fourth quarter (ended Dec. 31, 2017) with 5.9 million subs.

“The next industrial revolution will be on Verizon’s [5G] network and will positively impact society like no technology we have seen before,” CEO Lowell McAdam boasted on the fiscal call.

Meanwhile, Verizon’s pay-TV platform, Fios video, lost 29,000 subs in the quarter, to end the year down 75,000 subs at 4.6 million.

When asked whether Verizon would follow in the footsteps of AT&T and Walt Disney seeking to acquire a media company, McAdam punted. The executive admitted Disney’s acquisition of 20th Century Fox underscores the value of scale in the market place.

McAdam said the jury is out regarding the merits of Verizon acting as an independent distributor of content compared to owning and creating content.

“I think until all of this media consolidation [AT&T/Time Warner, Disney/Fox] shakes out, you really can’t determine whether that’s a path we would be interested in,” he said. “But I can say unequivocally there is nothing going on right now without considering a large media play [involved].”

“In fact, if you look at our actions like the NBA and the NFL announcement … we think being able to monetize through advertising and being independent is a very good place to play for us right now.”

Wall Street remains on the fence regarding Verizon’s first-mover 5G strategy.

“5G is going to be a hundred times faster than your typical Internet service, so not only is it going to be faster, it’s going to have better margins and give Verizon a ton of opportunity for new customer growth,” Michelle McKinnon, analyst with Payne Capital Management, told CNBC.

Jonathan Chaplin, analyst with New Street Research, said that while 5G enables Verizon to bridge technology divides in the market, doing so comes at a major fiscal cost.

“We’ve pegged it at least at $35 billion dollars,” Chaplin said. “That’s going to [more than] absorb the gains [Verizon is] going to get in tax reform savings over the next four or five years — which I don’t think the market is anticipating.”

 

 

 

 

Lionsgate Stock Jumps on Acquisition Scuttlebutt

Lionsgate’s stock took a mid-morning bounce Jan. 18 following media reports the studio/distributor is in the M&A crosshairs of media giants Amazon, Verizon, CBS and Viacom.

Shares increased 5% the day after a Deadline.com report – citing sources familiar with the situation – said the Santa Monica, Calif.-based company was in active merger discussions. Lionsgate shares have increased 20% in value since last November.

Lionsgate, which is headed by CEO Jon Feltheimer, has a box office hit in Wonder, which has generated $120 million at the box office since Thanksgiving. The studio ranks fourth in nascent domestic box office.

With Disney’s pending $52.4 billion acquisition of 20th Century Fox, consolidation within the media industry has renewed interest as online powers Netflix and Amazon expand their entertainment prowess globally.

Lionsgate, which has a robust home entertainment business, in addition to multiple digital ventures, is also a major producer of television content. The company’s $4.4 billion purchase of Starz in 2016 underscoring further its presence in premium television.

The company has also expressed interest in ancillary revenue streams, including a theme park in South Korea and live theatrical productions – ventures that require significant capital investment.

Last August, Reuters reported merger negotiations between Lionsgate and Hasbro ended following an impasse on the price.

Michael Burns, vice chairman of Lionsgate, last month told CNBC the Disney/Fox pact was good news since it eliminates one competitor from the market, while further validating the value of content.

“I think Lionsgate actually thrives in chaos. You’re in a place right now where you are going to see serious consolidation out there,” Burns said.

Lionsgate reports third quarter results Feb. 8.

Verizon CEO: ‘We’re Going to Completely Change the Way People View Sports’

Verizon and the National Basketball Association Jan. 17 announced an expansion on their three-year partnership that includes subscription streaming video and access on Yahoo.

Beginning with the NBA All-Star Weekend in Los Angeles (Feb. 16-18), the NBA and Verizon will unveil a series of collaborations leveraging Verizon’s 5G network and technology.

Verizon subs will direct Access to NBA League Pass, the live over-the-top video service co-managed by the NBA and Turner Sports – on Yahoo Sports and other Verizon media platforms.

The telecom and NBA will promote daily highlight video show, commentary, in addition to augmented reality, lifestyle programming utilizing the league’s archive of footage across Yahoo Sports and Verizon’s media platforms.

“With the addition of live NBA games … and more to our mobile sports offering, Yahoo Sports and Verizon’s family of media brands are becoming … an alternative for partners and advertisers,” Brian Angiolet, SVP, global chief media and content officer at Verizon, said in a statement.

The new agreement comes as Disney seeks to expand the ESPN brand digitally, including launching a standalone SVOD service this year.

Verizon CEO Lowell McAdam said that when the telecom purchased AOL and Yahoo in 2015 and 2017, respectively, a major objective was distribution of sports programing to more than 1.3 billion users across the Oath platform.

“As we look at digital media viewing, that’s got to be the cornerstone,” McAdam told Yahoo Sports.

The executive believes that after three years working with the NBA, Verizon can leverage all “those digital eyeballs” to better position the telecom (and advertisers) for next-generation 5G mobile technology.

“We’re going to completely change the way people view sports,” McAdam said.

NBA commissioner Adam Silver said the live-game experience for fans continues to evolve, with younger viewers increasingly consuming content on mobile devices.

Indeed, the agreement includes a $25 million joint fund to underwrite interactive 5G products centered around the end-user.

“If we want a pick-up game with five people in five different cities and do slam-dunk contests, you’ll be able to do it like you’re sitting together on the same court,” McAdam said.

 

Verizon Ups Video Content Rights From A+E Networks

Verizon and A+E Networks announced an expanded distribution partnership of both licensed and original content for the telecom’s pay-TV and Oath platform – the latter including Yahoo and AOL.

In addition to A&E, Lifetime, History and Viceland content for Fios, the deal includes first window rights for content from 45th & Dean – A+E’s digital entity.

Pay-TV and TV Everywhere rights include History’s “Knightfall,” which premiered Dec. 6; as well as “Vikings,” currently in its fifth season.

Other programs include Emmy-winning “Leah Remini: Scientology and the Aftermath” and “Live PD;” Lifetime’s National Women’s Soccer League games and fashion competition series, “Project Runway;” in addition to Viceland’s “Hamilton’s Pharmacopeia” and “Desus & Mero.”

Verizon’s mobile and digital footprint, which ranks No.1 in monthly U.S. millennial reach and No.2 in total monthly U.S. digital audience, will expand access to A+E’s digital content and create new mobile options for viewers across its family of media brands, including content geared toward women and other specific audience segments.

“This partnership expansion is yet another example of how we’re fueling our new Oath media brands,” Brian Angiolet, SVP, global chief media and content officer at Verizon, said in a statement.

Original mobile and digital content provided by 45th & Dean features short and medium-form content, including Frankenstein-themed sci-fi drama “Second Chance,” which reached over 80 million views in its first season, and unscripted pranks show, “Bae or Bail,” whose first episode has garnered over 40 million views to date.