Lawsuit revolves around Verizon pay-TV bundles
Following up on concerns raised earlier in the month, sports media giant ESPN on Monday filed a lawsuit against Verizon Communications for breach of contract.
Verizon’s proposed FiOS TV plan allows customers to break up traditional television bundles. Verizon offers a core package of channels and a separate sports tier, which includes ESPN and ESPN2. ESPN signaled the lawsuit when reps said that Verizon’s plan “would not be authorized by our existing agreements.”
Fortune reports that ESPN, part of Walt Disney, filed a lawsuit against Verizon in New York Supreme Court. ESPN wants an injunction plus damages.
“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,” the Fortune article notes. “We simply ask that Verizon abide by the terms of our contracts.”
The lawsuit comes at a time when cable channels are facing drop-offs in subscriptions due to increased competition from online and over-the-top providers such as Netflix and Hulu. Major channels like ESPN typically have contracts with distributors that stipulate they have to be included in the most widely distributed tiers or must reach a certain percentage of the customer base.
Verizon FiOS President Tami Erwin said the package is designed so that it will not violate any content contracts.
While others have not yet weighed in on the new service, other channels such as Time Warner’s TNT and TBS and Comcast’s USA Network have also been put into tiers under the Verizon service plan.
“With consumers – especially younger consumers – demanding access to entertainment and information that matters to them, whenever and wherever they are, college sports with all of its live programming and networks targeted to millennials are a natural fit for any mobile-first video platform,” Terry Denson, VP of content acquisition and strategy at Verizon, said.
Verizon cited a recent study by CTM/University of Southern California that claims nearly two-thirds of millennials surveyed consider smartphones or tablets as their primary device, and that they are more likely than others to engage in entertainment activities on their mobile devices. The study also touted a 12% increase in overall video consumption between 2013 and 2014, with 18- to 24-year-olds showing the largest increase, nearly doubling the national average.
Verizon has been aggressively pursuing media content delivery through its Verizon Digital Media platform.
