Verizon today announced significant changes to Verizon Custom TV programming packages – changes widely believed to be aimed at appeasing ESPN, which filed suit against Verizon when Verizon did not include ESPN channels in the initial Custom TV basic package.
According to a Verizon spokesman, new Custom TV customers will have to choose from the new packages, while existing customers will be able to keep the packages they have. The new packages, which are available to customers served over Verizon’s FiOS fiber-to-the-home infrastructure, are scheduled for launch this weekend, according to a Verizon press release.
Verizon’s Custom TV packages are in the category some refer to as “skinny bundles” – lower-cost programming packages with fewer channels. Pay TV providers have become increasingly interested in offering skinny bundles as a means of minimizing video cord cutting.
Changes to Verizon Custom TV
When Verizon last year launched Custom TV, the offering included 35 channels and cost $65 a month as part of a double play that also included 25 Mbps symmetrical FiOS Internet. Customers also got two additional programming packs including options such as a Kids pack, a Pop Culture pack or a News pack.
ESPN was included in one of the add-on programming packs but not in the basic Custom TV lineup – a move ESPN considered to be in violation of its contract with Verizon. Typically ESPN contracts with pay TV providers state that ESPN content will be included in the broadest available tiers. And although Verizon continued to offer ESPN in its traditional higher-priced packages with a broader channel array, that apparently wasn’t sufficient to satisfy ESPN.
Changes to Verizon Custom TV packages result in offering customers a choice of two different plans. Custom TV – Essentials still does not include ESPN, but Custom TV – Sports & More does. According to Verizon, Custom TV triple plays with FiOS Digital Voice and FiOS Internet with 100 Mbps symmetrical speeds will start at $69.99 monthly. Customers can add up to three add-on packs for $6 each. Verizon lists three add-on packs in its press release –Movie Lovers Pack, Kids Teens & Family Pack and a Global Sports Pack.
The Verizon spokesman declined to comment on whether ESPN had dropped its suit against Verizon. But on Verizon’s recent earnings call, the company’s CFO Fran Shammo said that Custom TV would be “refreshed” to be in compliance with contractual requirements. Shammo also noted that ESPN was “a great partner” and added that “we’ll work with them.”
Future Implications
If indeed Verizon and ESPN have made peace, that could be good news for other pay TV providers contemplating offering a skinny video bundle, as ESPN apparently isn’t prohibiting Verizon from offering an ESPN-free skinny bundle; instead, the sports programmer seems to simply wants to make sure that its content is included in at least one skinny bundle.
The downside is that the margins on a skinny bundle that includes ESPN are likely to be slimmer than if that content were to be omitted. The high cost of ESPN programming is likely what caused Verizon to leave it out of the basic Custom TV lineup to begin with.
How well Verizon’s skinny bundle with ESPN will sell remains to be seen. Previously Shammo noted that Custom TV purchasers tended to be people who aren’t interested in sports. His comments suggest that not many people were opting to take the sports add-on package that Verizon from the beginning offered for Custom TV.
