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Telecom Carriers Deploy Divergent Local TV Service Strategies

Supriyo Bose

Leading telecom service providers Verizon Communications Inc. VZ and AT&T Inc. T have embarked on divergent strategies for the local TV service to meet their corporate objectives. The purported moves seem to be the call of the hour as the battle for survival gets murkier with intense price competition and more content-driven options from Amazon.com, Inc. AMZN, Hulu and Netflix, Inc. NFLX.

Winding Up Operations & Retrenchment

Verizon has reportedly decided to wind up the operations of news channel Fios1 (Fiber Optic Service) News, which is one of the two hyperlocal cable-news channels serving New York City’s metro area. Since its inception about a decade ago, Fios1 News has offered news coverage of the local communities, including high school sports, traffic, local business stories and weather. It provided a perfect platform for Verizon to stay connected with local customers and further attract newer ones away from other local cable channels.

However, the company has now decided to pull its shutters down from Nov 16 and retrench about 150 employees to cut costs. Just a few days back, Verizon announced plans to divest the social media blogging site — Tumblr —  for an undisclosed amount, to San Francisco-based web developer firm Automattic Inc. (Read more: Verizon to Sell Tumblr to Focus on Premium Original Content) Moreover, the company has offered a voluntary severance package to about 44,000 employees to trim its workforce by about 30%. The move was part of a four-year plan of the company to reduce operating costs by $10 billion by 2021.

Launch of TV Service

Meanwhile, AT&T has rolled out a service for television viewers to attract more consumers who are lured by the rich video content of avant-garde media firms. Dubbed ‘AT&T TV’, the service will offer more than 40,000 on-demand titles and live TV coverage of favorite channels like ESPN, TNT and others, as subscribers can combine it with wi-fi access.

The bundled offer includes an easy-to-install device that lets customers access applications with other entertainment options, such as Netflix and Pandora. The remote-controlled device also features Google Assistant that enables customers to use voice command to view their favorite programs. Initially launched in about 10 cities across the country, the service offers AT&T a perfect platform to focus more on video streaming content as users can also access the service on a smartphone, tablet or web browser via an app.

AT&T further intends to roll out a streaming service in spring 2020, with an unrivaled bouquet of premium and exclusive content for an impressive direct-to-consumer experience across the age group. Titled HBO Max, it will offer about 10,000 hours of premium content, leveraging an extensive collection of exclusive original programs and the most sought-after shows from WarnerMedia’s vast portfolio of beloved brands and libraries. (Read more: AT&T to Roll Out HBO Max Streaming Service in Spring 2020)

Moving Forward

It remains to be seen how these strategic moves benefit the companies in the future. For the moment, we can safely vouch that both these Zacks Rank #3 (Hold) stocks are leaving no stone unturned to achieve their corporate objectives, no matter how different these might appear on the surface. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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