ESPN Says Verizon FiOS Contracts Don’t Permit Separate Sports Packages – Update
UPDATE, 7:23PM: ESPN has thrown up a red flag to Verizon’s plan to allow FiOS TV subscribers to choose smaller “skinny” packages of programming bundles tailored a little more closely to individual consumer tastes — including splitting off ESPN and ESPN2 into sports bundles. The Re/code website reported late this afternoon that the Disney-owned sports network asserted that Verizon’s new packages “would not be authorized by our existing agreements. Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.” Verizon will need to backpedal or come to terms with Disney’s ESPN quickly as it plans to roll out the new plans starting Sunday.
PREVIOUSLY, 8:13AM: Verizon’s PR team deserves a lot of credit today for spinning the roll-out of FiOS’ new Custom TV programming option. The Wall Street Journal took the bait that the company revolutionized TV as we know it with a story this morning breathlessly headlined: “Verizon Breaks Pay-TV Bundle As Competition Mounts.”
Good story if true. But the scant details about the offering — there’s no official release yet — suggest that FiOS is scoring outsized kudos for an initiative that might merely bend the bundle, without coming close to breaking it.
Here’s what we know: Starting on Sunday, FiOS customers will be able to opt for a package that starts at $54.99 a month for a Base service of 35 channels — plus two so-called “Packs” of 10 to 17 channels built around genres including Kids, Lifestyle, News & Info, Sports, Pop Culture, Entertainment, and Sports Plus. Subs can add packs for $10 apiece per month, and swap them after 30 days.
Double Play service will cost $64.99 and Triple Play will be $74.99. There’s no contract.
But we still don’t have the most important information: What specific channels will be in the Base service and each of the Packs?
Verizon merely says that the Base will include CNN, HGTV, AMC, Food Network and all local broadcast channels. The Sports Channel Pack will have ESPN, Fox Sports “and more.” The Sports Plus Channel Pack will have regional and specialty services including NFL Network, MLB Network, NBA TV, NHL Network and Golf Channel.
The Journal says that Nickelodeon will be in the Kids Pack, and USA and TNT will be in the Entertainment Pack.
But what about other popular channels such as Discovery, Disney Channel, BET, Fox News, FX, MSNBC, CNBC, Comedy Central, Lifetime, or Cartoon Network? Looks like Verizon subs will have to wait until Sunday to find out whether they’ll be part of the Base package, or an extra-pay Pack.
The thing to remember, and that some don’t seem to recognize in crediting Verizon with breaking the TV bundle, is that programmers still have the power to keep their bundles intact. And they like collecting payments from people who don’t watch their channels. That’s why they’re careful to spell out what distributors, including Verizon, can do with their offerings.
That clout may be weakening, as viewers flock to online alternatives such as Netflix. Yet it’s strong enough to ensure that services offering skinny packages of traditional channels, including streaming service Sling TV, still offer programmers’ bundles — just not with every provider.
“In much of the media, the sentiment seems to be that cable is dead, it just doesn’t know it yet,” Cowen & Co analyst Doug Creutz says this morning. “However, in the investment community, we think consensus still views the threat to the [pay TV] bundle from [streaming] as relatively small.”
It would be a big deal if Verizon’s new offering indicates that AMC Networks, Discovery, Disney, Fox, NBCUniversal, Scripps Networks, Time Warner, and Viacom agreed to break their bundles. It could also be important if Verizon found a way to offer more options without breaching its contracts.
But we won’t really know what’s up until we see more details than Verizon has released, and the Journal has reported.
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