ESPN is suing Verizon over trying to sell small bundles of TV channels for its FiOS TV, though Verizon CFO says they are still allowed to sell these packages.
ESPN had already expressed concern over Verizon’s Custom tiers for its FiOS TV, attempting to sell skinny TV bundles to consumers as according to ESPN, the new packs violates the terms and conditions of their existing contracts. Well, it’s just not a statement of discontent anymore, as ESPN has filed a lawsuit in New York on Monday against Verizon for breaching the contract.
Last week, Verizon announced a new range of packages for its FiOS TV service starting at $55 monthly, which allows customers to choose the networks they usually watch. The package is aimed at giving customers the flexibility to spend only on the channels they prefer watching.
However, it’s the so-called big bundles that major TV companies have been focusing on for years. ESPN and parent company Disney, along with Time Warner Inc., Viacom and 21st Century Fox cash-in on big bundles they offer distributors, despite the amount of channels pay TV customers watch. Verizon’s move is an underlying threat to this business model, as it affects the wider distribution of prominent TV companies which helps them generate revenue via advertising, along with the carriage fees levied for each channel.
“ESPN is at the forefront of embracing innovative ways to deliver high-quality content and value to consumers on multiple platforms, but that must be done in compliance with our agreements. We simply ask that Verizon abide by the terms of our contracts.”
In response to the lawsuit filed by ESPN a Verizon spokesperson said, “Consumers have spoken loud and clear that they want choice, and the industry should be focused on giving consumers what they want. We are well within our rights under our agreements to offer customers these choices.”
However, top executives at Verizon still believe its current agreement gives them the leverage to offer these skinny bundles.
“We believe that we are allowed to offer these packages under our existing contracts”, said Verizon CFO Fran Shammo.
For the past few years, customers have been cribbing about the fact that they have to pay for channels they don’t even watch. On the contrary, it can also be argued that selling big bundles does help subsidize these popular channels.
Another factor pushing the pay-for-what-you-watch model is that Customers are now beginning to opt for more affordable online services such as Netflix and Hulu. Moreover, new entrants in the cyberspace are shaking things up in the TV marketplace. Streaming services like Sling TV, for instance, offer customers a mix and match of channels depending upon their preference.