ESPN Puts Brake on Verizon's Smaller TV Bundle

17 Apr, 2015 By: Erik Gruenwedel

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Verizon’s ambitious attempt to unbundle the pay-TV ecosystem beginning April 19 may have hit a snag after Disney-owned ESPN reportedly said it would not support such a move.

Verizon is rolling out “FiOS Custom TV” packages for $54.99 a month featuring a 35-channel program slate. Additional sports and entertainment packages — the former featuring ESPN — can be acquired for $10 a month. That supplementary program package apparently irked ESPN.

“Media reports about Verizon’s new contemplated bundles describe packages that would not be authorized by our existing agreements," ESPN said in a media statement. "Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.”

Indeed, Dish Network’s Sling TV, which was the first OTT service offering ESPN and ESPN2 outside of a traditional pay-TV bundle, does so as part of the service’s 20 basic channels.

ESPN, along with HBO, Showtime and AMC Network, remain pillars of the traditional multichannel video program distribution universe. ESPN, the No. 1 sports network, receives the highest subscription fee among major pay-TV content plays.

While pay-TV households pay from $100 a month for access to 150 channels, industry reports say the average TV consumer watches no more than 17 channels — with ESPN near the top.

With HBO, AMC and soon Showtime entering the over-the-top video market with standalone services, the cat is already out of the bag regarding efforts to keep the traditional TV bundle intact. But the aforementioned OTT services have been carefully packaged targeting a growing consumer base of broadband-only households.

Yet, Verizon’s FiOS Custom TV is not a broadband-enabled platform. Instead, it is introducing a smaller, less-expensive (by about $20) channel bundle than its lowest-priced current bundle.

FiOS president Tami Erwin told CNBC in an earlier interview the decision to launch FiOS Custom TV was in response to changing consumer habits toward television.

"Customers want choice and increasingly customers have choice on video, and we've said very clearly we expect to be the preeminent broadband provider in the market, but we want to give customers choice on how they acquire and how they buy video," Erwin said.

 

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