Verizon has apparently hit a snag with regard to its efforts aimed at cord cutters. The cable TV provider recently introduced a way to purchase TV channel packages via à la carte bundles. But today, ESPN filed a breach-of-contract lawsuit against Verizon, arguing that Verizon’s move to break out ESPN’s channels into a separate sports tier that isn’t a part of the core package is not authorized by existing contracts.
ESPN had previously declared its unhappiness with Verizon’s new channel packages earlier this month, shortly after they went live for Verizon’s cable customers. The network a little over a week ago released a statement which claimed that Verizon didn’t have the right to release packages that removed ESPN from the core lineup.
With its new “cord cutter” bundles, Verizon is offering a $59.99 base package to which consumers can add extra content as they choose.
According to Verizon, these TV packages are aimed at offering traditional cable subscribers more options when it comes to constructing the sort of channel lineup they want. It’s meant to stave off those who would otherwise want to drop their cable TV subscriptions entirely, or drop down to basic cable in an effort to save money.
In addition to the base offering, Verizon’s new cord cutter packages let customer pick and choose from other “channel packs” that are focused on specific genres – for example, there are packages dedicated to kids, news and sports.
It’s the latter where ESPN and ESPN 2 now reside. The channels are not included in the core package, which today offers only the major broadcasters’ channels and a small number of popular cable networks like CNN, AMC, Food Network and others. Instead, customers have to opt to purchase the sports package in order to access ESPN content. In other words, ESPN will only be viewed by those who are enough of a sports enthusiast that they’re willing to pay the extra $10 per month for the sports-themed channel pack.
While the nature of ESPN and Verizon’s specific agreement is not detailed, with networks of its size, contracts typically state that the channels must be distributed to a certain percentage of customers or have to be made available in the broadest tier which reaches most of the cable TV customers.
In a suit filed this morning in the New York Supreme Court, Disney’s ESPN says it’s seeking to stop Verizon from “unfairly depriving” it of “the benefits of its bargain,” according to a report from CNBC.
ESPN also released a statement about the lawsuit:
“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.”
ESPN is not the only network to have issue with Verizon’s new packages, which seem to have been rolled out without the full green light from its partners. Fox Sports and NBCUniversal have also said that the new TV tiering packages do not comply with existing agreements. And both Fox and Disney said they would stop running Verizon FiOS TV ads on their networks as a result.
Verizon is not alone in making the decision to market its service to cord cutters. Dish Network has also rolled out an internet TV service called Sling TV which caters to those who don’t want to pay for Dish’s satellite service or traditional cable.
And Cablevision just last week introduced cord cutting packages of its own, but so far, it has only disclosed its promotional pricing for the main package, which makes customers wonder if they’re really getting a good deal.
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