Count CenturyLink among the growing number of MVPDs that's developing an over-the-top video service.
CenturyLink isn’t sharing a lot of detail yet, including when it will launch the OTT offering and what programming and content will grace it, but it “will provide a robust competitive video offering for customers both within and outside our Prism TV market footprint,” company president and CEO Glen Post said Wednesday on CenturyLink's second quarter earnings call.
CenturyLink appears to be ramping up a slimmed-down OTT service amid the growing cord-cutting threat and the need to complement traditional, bigger pay TV bundles. It’ll also come into play amid other OTT-TV offerings that have emerged, including Sling TV, Sony PlayStation Vue, and standalone OTT services from Showtime, HBO and CBS, among others.
Post acknowledged that programming costs for Prism TV remain high, but said they are still profitable customers because about 97% of them also bundle in CenturyLink’s broadband service. But he expects to enjoy “higher margins” with the new OTT product.
"Over-the-top is certainly an opportunity,” Post said. “We have some new products coming out over-the-top that we think will be very profitable, and we'll include those with our Prism product as well as in areas we don't have Prism.”
CenturyLink is also expanding the reach of Prism TV, its managed, facilities-based IP-based video service. During the second quarter, the telco launched it in Portland, Salt Lake and Minneapolis, adding 175,000 addressable homes, expanding that total to 2.6 million. The company expects to end 20155 with about 2.8 million homes passed by Prism TV.
CenturyLink added about 8,400 Prism TV subs in Q2, expanding that base to 258,000.
Update: On the financial front, CenturyLink posted second quarter operating revenues of $4.42 billion, down from $4.54 billion in the year-ago quarter, while operating expenses rose from $3.82 billion to $3.84 billion due primarily to higher employee benefit expenses and costs associated with Prism TV. Adjusted net income was $308 million (55 cents per share), versus $408 million (72 cents) a year earlier.