Leading telecom company,
Verizon Communications Inc.
) is reportedly planning to acquire Los Angeles-based content
delivery company, EdgeCast Networks. Neither company has made any
official statement over this deal, but according to media
reports, the deal is set to be worth over $350 million. We
believe, EdgeCast Networks will provide significant advancement
in expanding the content delivery business of Verizon. The
company's rising focus on boosting its enterprise business has
accelerated in the recent past, as evidenced by the recently
proposed acquisition of U.S.-based upLynk.
Given the surge in demand for online video streaming thanks to
developments in technology, Verizon remains focused on growing in
content delivery services through its Digital Media Service
business. Launched in 2011, Verizon's Digital Media Services has
successfully enabled eminent advertising, entertainment and media
companies to deliver live and on-demand, customized video content
to consumers through multiple devices such as TVs, smartphones
We believe with the latest acquisition foray into companies
like EdgeCast and upLynk, Verizon will be able to integrate its
advanced infrastructure with simplified media content delivery
solutions. Nevertheless, Verizon is also likely to gain from the
customer base of upLynk and EdgeCast, which includes the media
The Walt Disney Company
), social Media like Twitter and Pinterest, along with video
streaming companies like Hulu.
Besides, Verizon consistently collaborates with media and
cable companies to foster market share gain in different service
categories. It also enters new sectors without seeking merger and
acquisition strategies. The company has tied up with Cox
Communications to offer bundled service packages consisting of
video, phone and Internet in Phoenix and Las Vegas. The telecom
carrier has also extended its multi-year agreement with National
Football League (NFL) for content delivery. The renewed agreement
is expected to extend the ties between the two entities through
the inclusion of live afternoon coverage of games aired by
) and Fox Sports on Sunday and for off-season games.
Verizon has also entered into a long-term contract with Turner
Broadcasting, a unit of
Time Warner Cable Inc.
) for providing Turner's content to FiOS TV Subscribers. The deal
would provide Verizon's FiOS TV Subscribers with access to
several entertainment channels including TBS, TNT and Cartoon
Network, which can be watched through television, PC, tablet and
mobile handsets. All these developments reflect Verizon's
increased efforts on going beyond conventional telecom market
development. We believe that the new takeovers, coupled with
organic growth in multimedia content delivery platforms will
provide Verizon with a significant opportunity to grow, despite
the saturated and fiercely competitive U.S. wireless market.
Verizon currently has A Zacks Rank #3 (Hold).
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