Verizon Adds Fewer Pay TV Subscribers, Touts Demand for "Skinny" Bundles

Telecom giant Verizon on Thursday reported that it signed up 20,000 net new pay TV subscribers for its FiOS video service in the fourth quarter, compared with a much stronger 116,000 net additions in the fourth quarter of 2014.

Verizon ended 2015 with a total of 5.8 million subscribers to the FiOS video service, which competes with cable and satellite TV companies, compared with 5.6 million subs at the end of 2014. That meant it added 178,000 net video subscribers for the full year 2015. The company's latest financial and subscriber update opened quarterly earnings season for pay TV companies.

Analysts have said that telecom companies' pay TV subscriber growth has weakened, while some big cable operators are actually expecting to grow their video subscriber figures for the full year 2015.

"The deceleration in FiOS is extraordinary," MoffettNathanson analyst Craig Moffett said in a first reaction. "Telco TV has seemingly hit a brick wall. It would be easy to blame cord-cutting, but what is really going on is the improbable resurrection of cable. Satellite is facing the same challenge. After a decade of being a net share donor, the big cable operators are taking back share."

Verizon on Thursday, however, touted the demand for its Custom TV service, which offers "skinny" pay TV bundles, saying "customer interest continues to grow for Custom TV, which represented about one-third of FiOS video sales" in the latest quarter.

On an earnings conference call, Verizon CFO Fran Shammo said xxx

Verizon also said it added 99,000 net new FiOS broadband connections in the fourth quarter, compared with 145,000 a year earlier, to finish the year with 7.9 million.

For the third quarter of 2015, Verizon had reported 42,000 net additions for its FiOS video service and 114,000 FiOS broadband customer net additions.

The company last year also launched millennials-focused mobile video service Go90, and Shammo said millennials and offers taking advantage of the "increasing over-the-top" trend remain a core focus for the company. In its report, Verizon also highlighted the acquisitions of AOL and Millennial Media, saying they "added capabilities that significantly bolster Verizon’s strategy with strong cross-platform consumer and advertising offerings, particularly in mobile and video."

On the earnings call, Shammo said the company was "pleased" with AOL’s performance in the fourth quarter.

"Verizon embraced transformational change in 2015, and in 2016 the company has a huge opportunity to drive a new era of growth in our industry,” said Verizon chairman and CEO Lowell McAdam.

Read More: Why Cable Companies Are Actually Expecting Subscriber Increases This Year