Verizon Launches Customized FiOS TV Package Despite ESPN Objections

NBCU, Fox Sports also claim telco doesn't have rights to offer new genre-based tiers; Verizon says it believes it does

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Verizon Communications officially launched FiOS Custom TV, touting unprecedented ability for U.S. consumers to select genre-based channel packs on top of a baseline 35-channel lineup.

But ESPN, for one, says the service violates the terms of the sports programmer’s distribution contract with the telco, because it puts ESPN and ESPN2 on a separately priced tier. (UPDATE: NBCUniversal and Fox Sports on Tuesday also said that Verizon’s new package is not authorized.)

Moreover, FiOS Custom TV — despite Verizon’s marketing claim that you can “pay for what you want and not for what you don’t” — is far from the a la carte idea that customers should get to choose exactly which channels they want to subscribe to. Users must select two optional genre packs on top of the non-optional 35-channel base; those are sports, sports plus, kids, lifestyle, news and info, pop culture and entertainment.

The new Verizon package “would not be authorized by our existing agreements,” ESPN said in a statement. “Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.”

Verizon insisted that it’s within its rights to offer FiOS Custom TV. “FiOS Custom TV is a product consumers want, and it’s all about consumer choice,” a rep for the telco said. “We believe we are allowed to offer consumers and small businesses this choice and flexibility under our existing contracts.” Verizon cited Nielsen data that U.S. TV viewers watch only an average of 17 channels on a regular basis.

Verizon and Disney/ESPN are in discussions about the issue, according to a source familiar with the situation.

(NBCU said in a statement, “Verizon’s announced ‘Custom TV’ package does not comply with our existing agreement,” while Fox Sports said, “We reject Verizon’s view that it can pursue the new packaging scheme it announced yet still comply with our agreements.” The two programmers’ complaints about the telco’s offering were reported earlier by the Wall Street Journal.)

FiOS Custom TV is an evolution of Verizon’s previous “Select HD” entry-level package, which excluded sports networks. Starting at $59.99 for standalone TV and $79.99 for a triple-play bundle, the FiOS Custom TV base package’s 35 channels include all local broadcast networks, as well as CNN, HGTV, AMC, Food Network, Univsion, HSN and QVC.

The seven channel packs, with between 10-17 networks each, are $10 extra per month. Verizon said customers can change their channel packs after 30 days or add one at any time.

The Sports Channel Pack, for example, includes ESPN, Fox Sports, NBCSN and others; the Sports Plus Channel Pack includes regional sports networks and specialty sports programming like NFL Network, MLB Network, NBA TV, NHL Network and Golf Channel. Entertainment includes USA Network, TNT and TBS; News and Info includes Fox News, MSNBC and CNBC; and Kids includes Nickelodeon, Disney Channel and Cartoon Network.

Verizon ended the first quarter of 2015 with 5.7 million subscribers, making it the sixth-largest pay-TV distributor in the U.S.