ESPN Sues Verizon For Trying To Give Consumers What They Want

from the sisyphus dept

As we noted last week, Verizon is responding to more flexible Internet TV bundles by offering a few new options of their own. Verizon's new FiOS Custom TV broadband bundles include a core lineup of channels with the option of adding on an assortment of $10 channel add on packs. Once you get done adding the usual DVR rental costs, contracts and fees, the effort is much less revolutionary than it's being portrayed in the media. Still, Verizon's move is notable in that it's busting the biggest contributor to soaring cable costs (sports) and busting it out of the core channel lineup. No longer forcing people who don't watch sports to pay for it? Outrageous.

Comcast/NBC, Fox and Disney/ESPN have been throwing a hissy fit in the week since the new options were announced, claiming that the new offerings violate existing contracts. It's not too surprising; breaking a channel like ESPN out of the core channel bundle immediately reduces ad impressions and overall marketing footprint, even if it's unfair for consumers to pay for incredibly-expensive content they have absolutely no interest in.

ESPN has now filed suit, issuing a summons (pdf) to Verizon (the actual complaint is still being redacted and hasn't been made public yet), stating that Verizon is in breach of contract. ESPN is requesting an immediate injunction and a financial penalty of $500,000. In a statement, ESPN argues that the channel really loves "innovation," except when it doesn't:
"A statement from the network explains that “ESPN is at the forefront of embracing innovative ways to deliver high-quality content and value to consumers on multiple platforms, but that must be done in compliance with our agreements. We simply ask that Verizon abide by the terms of our contracts."
Would that be the same contract that ESPN believes prevents innovative ways of delivering high-quality content? As 2015 becomes the year that Internet video finally starts to see some interesting but imperfect new options, ESPN's swimming upstream if it hopes to sue its way toward keeping cable permanently stuck in 2003. Consumers are increasingly making it clear that soaring programming rates simple aren't tenable, and they intend to cut the cord or flee to piracy if the cable industry wants to continue stumbling drunkenly down the current path.

If ESPN wants to get out ahead of it all, the company might want to focus on actually being at the forefront of developing "innovative ways to deliver high-quality content and value to consumers," in lieu of suing the limited number of cable companies actually trying to do this. Instead, like so many legacy giants, it will sue to try to stop the disruption, push even larger rate hikes on all of the remaining sports customers in the belief that the current cable TV cash cow will live forever, then act disoriented and stupid in a few years when the company finds itself behind the sports programming innovation eight ball.
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Filed Under: bundles, contracts, fios custom tv, over the top, video
Companies: disney, espn, verizon

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  1. identicon
    Jim, 28 Apr 2015 @ 11:45am

    ESPN is panicking because...

    ESPN, over the past few years, have signed rights contracts with several leagues, at huge premiums over previous contracts, with such organizations as the NBA, the NFL, the SEC, the University of Texas, as so on, to the tune of tens of billions of dollars, in total. There have been real bidding wars among the sports bundlers (or content companies, as referred to on this blog) for these rights. Worse yet, most of these contracts extend well into the 2020's.

    The one assumption that all of the sports bundlers have made over the last 3-4 years, in signing these deals, is that they would be carried in 70-80% of American homes, the old regime, so to speak, making just about everyone in the country pay a monthly sports tax, for programming that most don't care about, and spreading out the cost among hundreds of millions of customers.

    The cord-cutting revolution, as well covered on this blog, has frankly caught them by surprise, and they are at Defcon 5 about these long-term contracts, and the fact that ESPN, Fox, NBC/Comcast, etc., just might not be able to pay the bills, in just a couple of years. This is also why pro sports leagues have been very proactive recently about getting into the streaming game, which may be their main source of revenue, sooner rather than later. This is a huge story, indeed.

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