NBCU, Fox Oppose Verizon's Skinny Bundles, But Provider May Have Legal Standing
NBCUniversal and Fox Sports yesterday joined ESPN in accusing provider Verizon of "violating contracts in its bid to offer slimmer, cheaper packages of pay TV," according to a front-page piece by Flint & Gryta of the WALL STREET JOURNAL. Similar to ESPN last week, NBCU and Fox yesterday said that Verizon’s offering "violates the agreements" under which they supply the company with NFL and MLB programming. The dispute "creates a cloud of uncertainty over Verizon’s new packages, which launched Sunday and start at $55 a month." But Verizon Exec VP & CFO Fran Shammo believes that the company "can offer the programs under its existing contracts and isn’t going to back down." While Verizon and other pay-TV distributors "have the ability to create low-price offerings without ESPN, whether it can then package ESPN in an offering with other sports channels to be sold separately is a point of contention." Comcast, which owns many RSNs, yesterday said that the new offering "falls outside the terms of its contract with Verizon" (WALL STREET JOURNAL, 4/22). NBC and Fox said that they "are dealing directly with Verizon to address their concerns" (WASHINGTON POST, 4/22). In L.A., Meg James reports Viacom, which owns MTV, Nickelodeon and Comedy Central, "sent a letter asking Verizon to clarify its position" (L.A. TIMES, 4/22).
LAW ON THEIR SIDE? In N.Y., Claire Atkinson cites sources as saying that despite protests from programmers, Verizon "may have the right to offer the option to a small sliver of its customers without breaking its programming agreements." A source said, "It's an upsell. It’s a bit of a sham, a way to get the phones ringing. They won’t let everybody take it. There is no way the programmers are going to let Verizon punch through." Verizon "is standing by its argument that it already has the right to offer smaller channel packages." A company spokesperson said, "As far as we are concerned, FiOS Custom TV is a product consumers want, and it’s all about consumer choice. We believe we are allowed to offer consumers and small businesses this choice and flexibility under our existing contracts." Still, one source said that Verizon’s contracts "are probably among the most restrictive since it is a relatively new entrant into the pay-TV business and one of the smallest with around 6.5 million households" (N.Y. POST, 4/22).