Verizon is taking a bold step to get people to sign up for FiOS cable service by offering select TV packages instead of a clump of channels nobody likes or watch. It sounds like a win for everybody except for the cable channels – mainly ESPN.
“Media reports about Verizon’s new contemplated bundles describe packages that would not be authorized by our existing agreements. Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.”
Re/Code’s Peter Kafka has an explanation of what Verizon is offering and how much the service will cost. Without a bundle, service starts at $55/month.
The problem with this is that ESPN wants to be on basic cable, I.E. the channels you get when you sign up for service. And it’s probably in the agreement that ESPN and maybe ESPN2 be in the core cable package you get when you sign up for service. ESPN doesn’t want to be in a digital package. This situation came up a decade ago when Cox Communications wanted to do the same thing and eventually caved to their demand.
Verizon doesn’t want this because ESPN is an expensive channel to carry: cable companies pay ESPN $6 per subscriber – hence the reason why cable is getting expensive. This doesn’t include ESPN2 and regional sports networks like Fox Sports and Comcast. Anything that keeps cable rates down and hopefully lead people to go back to cable.
Both companies are probably fighting behind the scenes and we’ll see who won the battle if nothing changes (Verizon won) or ESPN has been added to the base package (Disney won).