April 22, 2015
ESPN, Fox and NBCUniversal claim that Verizon’s newly launched package offerings, that feature cheaper bundles of pay TV channels, violate the terms of their respective agreements. On Sunday, Verizon introduced new flexibility for FiOS subscribers by offering a slim package of channels and optional add-on “channel packs” that feature genre-based channels. A few days prior to the launch, ESPN expressed its objection to being placed in an optional sports tier. Fox and NBCUniversal claim the Verizon plan is also outside the terms of their contracts.
However, Verizon believes it is in compliance with its agreements. “We have launched the product, we are not retracting it, and we believe we are in our legal rights to launch it,” responded Fran Shammo, CFO at Verizon Communications.
While some consumers and analysts have recommended a move to a la carte pricing, skinny bundles or some other new approach to pay TV, many content producers and television networks have been wary of disrupting the traditional model.
“Media reports about Verizon’s new contemplated bundles describe packages that would not be authorized by our existing agreements,” explained ESPN last week. “Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.”
“ESPN’s statement — which complains specifically about having its networks relegated to an optional sports tier, instead of being included in the base package — suggests that Verizon never got an agreement from the programmer before it announced its plan,” reports Re/code.
“Verizon is the country’s largest wireless carrier,” explains The Wall Street Journal. “But it also serves 5.7 million pay-TV subscribers, ranking it among the top providers in that industry, and is working on an ‘over the top’ service that will be delivered primarily to mobile devices. The disputes put it at odds with major programmers at a time when the pay-television industry and content companies are experimenting with a variety of new approaches as viewers migrate to the Internet.”