Fox, NBC Universal Dismiss Verizon Smaller TV Bundle22 Apr, 2015 By: Erik Gruenwedel
Fox Sports, NBC join ESPN saying FiOS Custom TV violates existing broadcast agreements
Fox Sports and NBC Universal have joined ESPN claiming Verizon’s FiOS Custom TV, a new smaller channel bundle costing $54.99 a month, infringes upon existing contracts.
Verizon April 21 formally launched FiOS Custom TV, which marks the telecom’s attempt to offer consumers an alternative to the traditional 150-channel subscription. In addition to 35 basic channels, subscribers have access to additional sports and entertainment bundles priced at $10 each per month.
That slicing and dicing of channels doesn’t sit well with 21st Century Fox, parent of Fox Sports and 20th Century Fox.
“We reject Verizon’s view that it can pursue the new packaging scheme it announced yet still comply with our agreements,” Fox Sports said in a statement to Bloomberg Business. “That said, we prefer to keep our commercial discussions confidential, and we will continue to address our concerns directly and privately with Verizon.”
ESPN last week said Verizon’s new TV bundles would not be authorized by existing agreements with the telecom.
"Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package," ESPN said in a media statement.
When asked about the issue, Verizon CFO Fran Shammo, on the company’s fiscal call, said the telecom believes it is within its retransmission contracts to offer smaller channel bundles.
“So we’ll leave it at that,” Shammo said on the call.
FiOS Custom TV is also intended to dissuade subscribers from cord-cutting and opting for burgeoning over-the-top linear TV services such as Sling TV, PlayStation Vue, and future services from Apple and AT&T. Verizon plans to launch an OTT video service targeting mobile subscribers this summer.
Jupiter Research says growth in OTT video services such as Netflix and Amazon Prime Instant Video will generate $31.6 billion in revenue by 2019, up from $8 billion in 2014.
“Allowing distributors such as Sling TV to provide customers with a cheaper, tailored alternative to cable TV, [is] driving the trend for cord-cutting,” Jupiter said.
Regardless, NBC Universal, which is owned by Comcast, believes changing technologies and consumer habits regarding television consumption do not mitigate retransmission deals.
“Verizon’s announced ‘Custom TV’ package does not comply with our existing agreement,” an NBC Universal spokesperson said.