ESPN is not happy with Verizon's recently announced Custom TV service. The sports TV channel has made its displeasure official by filing a lawsuit against Verizon, alleging the pay-TV provider of breaching its agreement with ESPN.
The Disney-owned sports channel filed its lawsuit before the New York Supreme Court, which it is requesting to prohibit Verizon from offering Custom TV service to FiOS customers because it is in violation of the contract Verizon had with ESPN. It is also asking the court to assess damages of $500,000 or more.
ESPN says it has agreed for Verizon to distribute ESPN and ESPN2 channels only through Verizon's standard package, which requires customers to pay for all 235 channels in the package even if they don't want them.
With Custom TV, customers pay $55 a month for a slimmed down version that features only 35 channels, including local stations and some of the most popular channels. They also have the option of choosing two out of the seven add-on packages created according to genre: kids, lifestyle, pop culture, entertainment, news and information, sports, and sports plus. ESPN and ESPN2 are included in the sports package, while ESPNews is in sports plus.
"ESPN is at the forefront of embracing innovative ways to delivery high-quality content and value to consumers on multiple platforms, but that must be done in compliance with our agreements," stated ESPN spokesperson Katina Arnold. "We simply ask that Verizon abide by the terms of our contracts."
In its court filing, ESPN says Verizon's new service is "unfairly depriving [it] of the benefit of its bargain." If Verizon and other pay-TV providers are allowed by the courts to offer skinny bundles such as Custom TV, it could sound the death knell for traditional and expensive TV bundles that are the lifeblood of ESPN and other sports channel's business.
Financial research firm SNL Kagan says ESPN makes the biggest revenue per subscriber per month from pay-TV subscribers, receiving $6.61 per subscriber each month. The second biggest earner, TNT, receives a paltry $1.65 compared to ESPN's earnings.
Verizon, which is also under pressure from consumer demand to keep down the cost of its offerings, however, stands firm by its latest service.
"Consumers have spoken loud and clear that they want choice," said Verizon spokesperson Deidre Hart, "and the industry should be focused on giving consumers what they want. We are well within our rights under our agreements to offer our customers these choices."
