Verizon has unbundled ESPN sports network from its regular programming packages, and ESPN is upset about that.
The complaint was filed on Monday in New York’s supreme court and alleges that Verizon is breaching its contract with ESPN by not bundling the popular sports network with regular programming packages of Verizon’s FiOS TV service.
The changes to Verizon’s packages allow customers to subscribe to a bare minimum lineup for $55 a month, which excludes ESPN as well as other channels, which can be added via two other tiers of programming. The more budget friendly packages should appeal to people who watch minimal TV and don’t want to pay for what they don’t use.
Internet TV services like Hulu, Netflix, and Amazon are putting pressure on pay-TV providers to offer more streamlined packages, where viewers only pay for what they want to watch. Time Warner Cable’s HBO, which has been a long time staple in the pay-TV networks, has begun offering its own streaming service for $15 per month, in response to this pressure.
“Verizon’s current skirmish speaks to the trouble distributors will have in creating a slimmer package that is attractive both from an economic and content perspective,” MoffettNathanson Research wrote in an analysis Monday.
ESPN says that Verizon violated a term of its contract that says that ESPN must be included in the main bundle of TV programming. Verizon’s new package allows customers to opt out of receiving ESPN programming as part of its discounted service. Despite the skirmish between the two companies, ESPN has not yet pulled its content from Verizon’s sports pack.
In a statement responding to ESPN’s lawsuit, Verizon said that “consumers have spoken loud and clear that they want choice, and the industry should be focused on giving consumers what they want.” They also denied that its new options break the contract.
In ESPN’s statement, the TV network claimed that it supports innovation as long as it doesn’t violate any existing contracts. Dish Network is working with ESPN to include ESPN and ESPN2 in its internet video streaming service, which costs $20 a month.
Few details of the lawsuit are available, because much of it is still confidential.
ESPN is very popular among pay-TV providers, as the channel has the rights to many popular sports games, and its audience often watches the programming live instead of using DVR recordings to skip the commercials.
The popularity comes at a cost though, with ESPN topping the charts as the most expensive in basic pay-TV channels. ESPN charges providers $6.61 per subscriber, significantly more than the second most expensive, which is TNT at $1.65.
The outcome of this lawsuit could help shape the future of how TV programming is packaged, with cable and satellite TV providers scrambling to maintain their grasp on the TV market, which is slowly moving over to Internet based streaming services.