Discovery Partners With Verizon For US Streaming Service

Discovery Inc. is rolling out a new streaming service in partnership with Verizon Communications to distribute it to the wireless company’s more than 50 million subscribers.

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The non-fiction, real life subscription streaming service, discovery+, will debut in the US on Jan. 4. The service will include a streaming library of 55,000 episodes from the major cable networks in the Discovery (DISCA) portfolio, which include HGTV, Food Network, Travel Channel, Discovery Channel and Animal Planet.

As part of the distribution deal with Verizon (VZ) for home and mobile entertainment viewing, the service will be free for up to 12 months for new and existing customers in the US. Elsewhere, Discovery has already kicked off the global rollout of discovery+ across an initial 25 countries, including in the UK, in Ireland, as well as in India.

“Connecting people to their passions is at the core of what we do, and adding discovery+ on us is a phenomenal way to serve customers who love lifestyle, home, food, true crime and natural history content from one of the popular portfolios of video brands,” said Ronan Dunne, CEO of Verizon Consumer Group. “Our Mix & Match plans already offer unrivaled value in entertainment, so we’re excited to kick off 2021 by giving customers up to 12 months of discovery+, adding even more value and choice as we continue to build our ecosystem of incredible partners and services.”

Customers who aren’t eligible for the free trial under the Verizon deal can directly buy the discovery+ service at a starting price of $4.99 per month, with an ad-free version available for $6.99 per month. Each account will include up to five user profiles and four concurrent streams. At launch, discovery+ will be available across major platforms, including connected TVs, web, mobile and tablets.

Commenting on the US distribution deal, Raymond James analyst Frank Louthan said that the streaming service partnership adds even more value for Verizon customers following the Disney+ package that the wireless company has. Louthan expects the discovery+ offer to be directed at Verizon’s 55 million wireless subscribers with an unlimited plan.

“The Disney+ partnership helped drive a significant number of subscribers to both parties. More importantly, it kept a lid on Disney+ churn as Verizon customers kept the product as they are subscribers,” Louthan wrote in a note to investors. “We believe Discovery covets a similar temperament of churn in this arrangement as well, as that validates the streaming model to investors.”

“The added value of video bundled with wireless customers is higher than some may think, and now that Verizon unlimited customers can potentially get Disney+, Hulu, ESPN +, and Discovery+ as part of their offering, the relative value is fairly high, and this should impact churn positively for both parties,” the analyst summed up. (See Verizon stock analysis on TipRanks).

Shares in VZ have advanced 6.3% over the past month and are now trading down a mere 0.1% on a year-to-date basis. The stock scores a cautiously optimistic Moderate Buy Street consensus. That’s with analysts split between 4 Buy ratings, 7 Hold ratings and 1 Sell rating. The average price target of $62.80 indicates 2.4% upside potential lies ahead over the coming year.