Sports juggernaut ESPN is raising objections to Verizon
FiOS’s plans to break up the traditional TV bundle and offer customers more choice in constructing their package of channels.
The new offering from Verizon FiOS, which was made available to customers Sunday, will allow people to buy a slim package of channels including major broadcasters and cable networks like CNN and AMC,
along with at least two channel packs of their choice in genres such as kids, news and sports. ESPN and ESPN 2 notably aren’t in the core package, but are offered in a separate sports tier.
In a statement late Friday, Walt Disney Co.
’s ESPN said such packages “would not be authorized by our existing agreements.” ESPN said that Verizon doesn’t have the right to place ESPN or ESPN 2 into separate sports tiers that aren’t part of the core package.
The plan threatens to reduce the number of subscribers to some networks if customers of Verizon FiOS, which is owned by Verizon Communications Inc., opt to buy packages that don’t include their channels. Major and minor channels alike have already experienced a dropoff in their reach into American homes over the past few years, as more people have opted to “cut the cord” or “shave the cord”–downgrade to a skinnier, cheaper package. Big channels like ESPN typically stipulate in their contracts with distributors that their networks have to be made available in the most widely distributed tiers or have to reach a certain percentage of the customer base.
A person familiar with ESPN’s thinking said Verizon may have released details about the new offering before contractual details were fully hammered out between the parties.
Verizon FiOS President Tami Erwin said in an interview Thursday that the company designed the packages such that it wouldn’t violate its content contracts.
But ESPN’s issues raise questions about whether other channels will also object or seek to negotiate new contracts as the TV landscape rapidly shifts and traditional pay-TV providers increasingly have to compete with new, cheaper online streaming services. Other popular channels like Time Warner Inc’s TNT and TBS and Comcast Corp.’s USA Network are also relegated to tiers.
Write to Shalini Ramachandran at shalini.ramachandran@wsj.com