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Understanding Verizon’s Digital Content Deal with A&E Network

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The deal

Verizon (VZ) recently agreed to a new carriage deal with A&E Network, which expects to give exclusive access to Verizon for content from A&E’s digital brand, 45th & Dean. A&E digital content from the 45th & Dean brand would include series like Second Chance and Bae or Bail.

The agreement would allow Verizon to develop the 45th & Dean brand on Verizon’s Oath media platforms, including AOL and Yahoo, to produce programming for those consumers who don’t subscribe to traditional pay-TV packages.

A&E’s cable networks—including A&E, Lifetime, and History—could remain with Verizon’s Fios subscribers. Other A&E content such as the National Women’s Soccer League games would also be streamed on Verizon’s Yahoo Sports and go90 platforms.

Further, Verizon would have digital rights to all promotional A&E content available on third-party VOD platforms such as Alphabet’s (GOOGL) YouTube or Facebook.

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Verizon focuses on digital content

Verizon acquired Yahoo in June 2017 to expand its digital efforts. After the acquisition, Yahoo’s assets were combined with AOL, which was purchased by Verizon in 2015 to form a new online media and advertising subsidiary called Oath.

In December 2017, Verizon created a new streaming deal with the National Football League, which gave Verizon exclusive mobile streaming rights. Its rival AT&T (T) is also heavily involved in content distribution, moving its DIRECTV programming into the mobile space.

The deal seems to be a part of Verizon’s efforts to expand its digital content footprint amid a declining pay-TV market and rising competition from wireless rivals T-Mobile (TMUS) and Sprint (S).

Keeping in view the challenges of the pay-TV market, Verizon is focusing on its Internet offerings through Fios. In 3Q17, Verizon added 66,000 Fios Internet customers compared to 90,000 net additions in 3Q16.

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