Verizon (NYSE:VZ) is still diligently working on ways to stave off competition on all fronts. Word has it that the telecom company plans to pay CBS (NYSE:CBS) for content for its television service. The most interesting part of this deal seems to be that it sets a precedent for providers paying for content from broadcast networks. And "pressure" is the overwhelming theme for many of the companies involved, as their respective industries face disruptive changes.
If cable giants like Comcast (NASDAQ:CMCSA) can offer packages that include not only traditional TV content and Internet connectivity, but also digital phone services, it goes without saying that telecom companies like Verizon would want to serve them up a taste of their own medicine and delve into TV. It's been clear for quite some time that Verizon has been building its content offering in the hopes of luring customers to sign up for a bundled package of services.
News agencies are reporting that Verizon is likely to pay an average of $0.50 or more per subscriber to offer content from CBS on its FiOS TV, which will include analog and digital signals as well as video-on-demand content. However, the companies themselves didn't reveal the financial terms of the deal.
CBS recently split off from Viacom (NYSE:VIA), so this represents the first such agreement that is an important part of its long-term strategy to derive revenues from retransmission of its signal. Meanwhile, it also represents the first step in possible pressure for cable operators to pay for broadcast content.
Back to Verizon -- I can't help but wonder if consumers could make the leap from telecom to television and view Verizon as a viable candidate for televised content. However, Verizon's CEO has said that in the first city where the service was rolled out, it quickly gained 30% of the market.
Deals like this plainly show that the pressure's definitely on in the telecom and cable industries, which are having a serious smackdown in the same playing field. Meanwhile, investors in CBS will be looking forward to seeing how this bid for additional revenues progresses.
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Alyce Lomax does not own shares of any of the companies mentioned.
