September 21, 2005

Verizon Signs Disney Content Deal, to Start Video

WASHINGTON (Reuters) -- Telephone carrier Verizon Communications, which this week plans to formally begin selling its new video service, said on Wednesday it has signed a long-term agreement to offer programming from Walt Disney Co.

Along with Disney, Verizon is also close to reaching a content deal for the new video and television service with Rupert Murdoch's News Corp. which could include channels such as FX, Fox News and the Fox Network.

"We are 99 percent there," Murdoch said on Wednesday.

Deals with media powerhouses such as Disney and News Corp. could prove an early and big boost to its nascent service, which will use high-speed, fiber-optic lines to compete against cable and satellite television providers.

Starting Thursday, the telephone carrier will formally offer its video service, known as Fios, in Keller, Texas. The company plans to make Fios available to 3 million customer homes this year.

Under the agreement with Disney, Verizon will carry 12 Disney television services, including several from the popular ESPN sports network as well as ABC News and the child-focused Disney channel.

"Verizon will formally flip the switch on our Fios TV service delivering a rich video experience to consumers," Verizon Executive Vice President Tom Tauke said at a forum sponsored by the Progress and Freedom Foundation.

Verizon said a formal deal with News Corp. has not been announced. But a spokesman said, "We expect to have all the programming our customers expect when we launch the service."

Local telephone carriers are trying to expand into the video business to compete against cable companies that have already moved into the telephone and high-speed Internet access business.

But Verizon and others have been slowed in their attempt to offer video because they may have to get licenses from thousands of cities and towns to do so. They have pushed for legislation to eliminate the need for such licenses or the ability to get statewide or national licenses to offer video.

Tauke also criticized draft legislation being considered in the U.S. House Energy and Commerce Committee that is designed to update U.S. communications laws to set the rules for new services like high-speed Internet telephone and video.

He said the bill could require Verizon to make a set-top box that acts a personal computer, which would increase the cost, potentially open it up to viruses and make it harder to protect copyrights. Additionally, the bill could set build-out requirements for its video service, Tauke said.

"Instead of encouraging competition in this market, they are making it harder for new entrants to get out of the starting gate," he said.