Mobile Plays a Bigger Role in Content Deals

Mobile assets are becoming a bigger factor in content negotiations, as deals that address mobility get increasing attention from telco TV providers like AT&T and Verizon Communications.

Both AT&T and Verizon have significant wireless assets: Verizon has about 113 million U.S. wireless customers and AT&T has about 78 million. Both providers intend to leverage those assets as they roll out mobile video services, top executives from both telcos told an industry conference.

“We are a perfect partner for a content group that wants to find ways to have additional streams of revenue to keep their businesses on track,” AT&T chief financial officer John Stephens said at the Bank of America Merrill Lynch Media, Communications & Entertainment conference. “Others aren’t doing it because they can’t.”

Stephens added that AT&T’s existing relationship with content providers through its U-verse TV and DirecTV platforms, which together comprise about 26 million customers, is also an advantage.

“The cable industry doesn’t have our wireless position,” Stephens said. “We’ll have some significant, hard-discussed negotiations with the content guys.”

Verizon last year also launched its own mobile-first product, go90, a free offering geared more toward short-form video. Marni Walden, Verizon’s executive vice president and president of product innovation, said at the BofA conference that when the telco does content deals, they are for the whole company, not a series of separate pacts for Fios, wireless and go90. As 5G technology becomes a reality, that also will be included in content talks, she said.

Walden added that those deals also reflect the different audiences each service reaches. “Certainly not all of that content is right for each one of those audiences, because an audience at Fios is a bit different than what you get on digital platforms or mobile,” she said.

While providers are expected to leverage their wireline and wireless assets in content deals, they may be better served ensuring content flows over their mobile offerings more efficiently and without interruption, said Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak. Some operators have made some moves toward mobile, he noted — Comcast has created a Mobile business unit and has invoked its rights in a Mobile Virtual Network Operator agreement with Verizon, but hasn’t yet released a product. He doesn’t expect those plans to be accelerated, minus a huge shift of audience from traditional pay TV to mobile.

“The broader, more important question is the increasing importance of being able to offer consumers mobility out of the home, and again this is addressed with WiFi,” Wlodarczak said.

He added that he believes cable should be in the wireless business — possibly through a T-Mobile acquisition — because there are massive synergies, and combining cable’s best-in-class wireline broadband with a mobile product could be compelling.