One week after Verizon Communications introduced its new “Custom TV” offering for FiOS video customers, the ESPN sports network filed a lawsuit on Monday alleging that the Custom TV service breaches program carriage contract terms between Verizon and ESPN.
Targeted at customers who are considering relinquishing their multichannel video subscriptions in favor of free or lowcost online streaming services, the Custom TV service unveiled, on April 17, gives new and current Verizon FiOS subscribers the option of purchasing streamlined channel packages. The offered groupings are built around sports, children’s’ programming and other themes that would supplement a base package of 35 channels. As a stand-alone service, the base channel package consisting of local broadcast channels and various cable networks such as CNN, AMC and the Food Network, is priced at $54 per month, and each custom package of between 10 and 17 channels would add $10 to the monthly price tag. While Custom TV stops short of functioning as an “à la carte” service, the monthly cost could represent a significant discount off of the average household cable bill of $90 per month, as calculated by research firm SNL Kagan.
Although a copy of the complaint filed with the New York Supreme Court was not immediately available, an ESPN spokeswoman asserted that Custom TV violates program carriage terms that prohibit distributors such as Verizon from placing ESPN channels into separate, add-on bundles. Charging that Verizon made “a unilateral” decision to place ESPN channels in separate bundles without first discussing that strategy with ESPN, the spokeswoman urged Verizon executives to “abide by the terms of our contracts.” Undaunted, Verizon maintained “we are well within our rights under our agreements to offer our customers these choices” as “customers have spoken loud and clear that they want choice.”