AT&T, Verizon Have Strongest Range of Core Services: Jeff Kagan

Image source: AT&T

As COVID-19 continues its impact on industries, we should expect to see changes or adjustments in growth strategies from many companies. Let’s take a look at companies in the wireless, telecom, pay TV, entertainment, Internet space and more. Companies like Verizon, AT&T, T-Mobile, Comcast Xfinity, Charter Spectrum, Altice, Disney and many others.

Today, smart companies are now actively studying their growth strategies and planning on changes that will help them continue to grow going forward over the next year or two or longer during Covid-19.

Public companies not only deal with the coronavirus, but they must also keep their investors satisfied, which is the main reason growth strategies are being examined and potentially adjusted.

Verizon, AT&T, T-Mobile, Comcast, Disney will adjust growth strategies

Fortunately, the core services of these key companies remain strong, in demand and growing. That means services like wireless, telecom, pay TV, Internet and more continue to show strength and growth.

On the other side, parts of the entertainment sector have been hit hard by the coronavirus and the shutdown. That means movie studios, entertainment, theaters, theme parks and more, and that will continue until the virus is defeated or at least on the ropes. That will happen. The only question is when.

Ten to fifteen years ago, sectors like wireless, telecom, cable TV, pay TV and Internet were separate industries. Today, after years of acquisitions, these industries, companies and services are blending.

Even together, these are still among the strongest core technologies we need to function as a society as individuals, businesses and governments.

So, the good news is these parts continue as strong as ever.

At the same time, parts of the entertainment industry are not as resilient.

Wireless, telecom, Internet, pay TV still core growth industries

The good news is companies like AT&T, Verizon, T-Mobile, Comcast Xfinity, Charter Spectrum and Altice still have their rock solid, core businesses.

It’s important to understand the difference between cable TV or pay TV and movie studios and entertainment.

On one hand, Pay TV, Internet, wireless, telecom and more are as strong as ever. People are at home, watching, talking, doing business and more.

On the other hand, movie studios, entertainment, theme parks, movie theaters are the hardest hit so far and will take longer to recover.

Wireless, telecom, pay TV, Internet are still healthy and growing

Disney is a good example to consider. This is a huge company in many different segments. Some of these segments are busier than ever like Disney+, Disney television, Disney Radio, its movie library and more.

Disney World and Disneyland are a mixed bag. Florida is open but limited. California is still shut down. Both are affected by COVID-19, of course, but there's a political element also whose trajectory is difficult to predict.

So, Disney is hard hit by the coronavirus, but certain segments are still doing fine.

Comcast's Universal Studios, entertainment and amusement parks are taking a significant hit also as movie studios, parks and theaters are either closed or open with a limited audience depending on the location.

Closed and limited operations mean job cuts and furloughs.

AT&T is in many different sectors today, several of which are growing as we've discussed, while its acquisition of DirecTV, its startup of AT&T TV, its acquisition of WarnerMedia with Warner Brothers Studios, CNN and more are a mixed bag.

So, it’s quite possible some of their sectors like wireless, telecom, Internet, pay TV including HBO MAX and CNN are as strong as ever, while other parts of their business, like Warner Brothers Studio and parts of WarnerMedia including are weaker temporarily due to the virus.

Streaming services like HBO Max, Disney+, Apple TV+, Peacock keep growing

Streaming services like HBO Max, Disney+, Apple TV+ and Peacock are new and can continue to grow during this time.

Companies like Comcast and AT&T and their new strategy of expanding into the entertainment and news space made sense prior to Covid-19. While it still makes sense, long-term, in the short-term things are not as clear.

Today, growth in certain sectors is still thriving, and in other sectors has slowed.

Verizon finally cutting AOL, Prodigy, Huffington Post

Verizon’s problem started several years ago when AT&T and Comcast started getting into the pay TV and entertainment space and competing.

At that time, Verizon made a move that I never understood. The company acquired AOL and Prodigy. With those acquisitions, they also got Huffington Post. They talked about becoming like an Amazon.com and other crazy aspirations.

While I understood the growth opportunity AT&T and Comcast Xfinity were chasing, I never understood what Verizon wanted with AOL and Prodigy.

You see, the problem with this acquisition is AOL and Prodigy were no longer on the growth side of the wave. They had crested and were on the falling side and had been for years.

Acquisitions need to be on growing side of growth wave

I always thought reversing that negative momentum would be very difficult, if not impossible.

Now, Hans Vestberg, the new CEO of Verizon, and I seem to be on the same track. He is moving away from AOL and Prodigy and I think this is the right move.

In fact, last week, one of Verizon’s holdings, Huffington Post, was being sold to Buzzfeed. Verizon will own a piece of that organization going forward, but the company won’t run it any longer.

So, mistakes were made by Verizon years ago with the acquisition of these old-timers that were on the falling side of the growth wave.

It’s good to see them making the best of a bad situation and focusing on the core business, wireless, once again. So, there is hope for them.

T-Mobile TVision joins crowded pay TV space

T-Mobile has been talking about entering the pay TV space over the last few years. The company launched TVision Home last year, which struggled and never really caught on.

Now, T-Mobile just re-launched its pay TV entry under the similar brand name TVision. Will this version be successful? Who knows? It’s a crapshoot. We’ll have to wait and see. Stay tuned.

The good news is there is a growing user demand for pay TV and wireless pay TV. Especially 5G wireless pay TV. So that should play well with all competitors in this space. It all depends on how well competitors position themselves, market and compete.

Will 5G wireless pay TV be successful?

Today, I think some companies and technologies will be successful and some will not. It depends on marketing, pricing, competitive positioning and more.

As you can see, the troubles some companies face are temporary and caused by the coronavirus. Troubles other companies face were caused by crazy moves like acquisitions that didn’t make sense and may take longer to resolve.

Understanding the real problems each company faces will help us determine if they are heading in the right direction going forward.

Companies must stay on growing side of growth wave

Remember, this is not the end of the world. It’s just a bump in the road. Something that can be avoided as growth continues. All it takes is a shift in corporate growth strategy.

And that’s where we are today. I think some companies will make the right next move and others will struggle.

AT&T, Comcast, Verizon should focus on core strength for growth

Fortunately, carriers like AT&T, Comcast and even Verizon have a depth in their wireless, wire line, Internet, and pay TV, which is very attractive to both individual end users and to companies and governments moving forward.

I look at tomorrow as a world where communications are the center of the universe. All communications, not just wireless.

Sure, 5G wireless is getting all the media attention these days, and it will play a significant role, but winning companies have so much more.

Consider wireless and wire line high-speed voice and data networks. Companies that offer a complete package of communications services can continue to grow with individuals, families, businesses and governments.

Why companies like AT&T, Verizon have real competitive advantage

That’s where communications companies like AT&T and Verizon have a real competitive advantage at their core. They can provide wireless and wireline services to their customers because they own both sides of the network.

They don’t resell like other major players do.

I expect to see a renewed vision and focus on these types of core services. Expect companies to go back to their core — a core which is as popular and growing and as needed today as it ever was.

Jeff Kagan is an Equities News columnist. Kagan is a Wireless Analyst who follows Telecom, Pay TV, Cloud, AI, IoT, Tele Health, Healthcare, Automotive, Self-Driving cars and more. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and LinkedIn www.linkedin.com/in/jeff-kagan/

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Equities Columnist: Jeff Kagan

Source: Equities News