Verizon’s plan to offer subscribers less expensive, à la carte bundles of television channels has irked ESPN, potentially crippling the move.
Starting today, Verizon was set to roll out new these new packages which let subscribers add small bundles of television programming instead of going all-in on 400+ channels. The plan works like this: FiOS subscribers pay for a base package that combines Internet service and a basic set of channels, then add on more programming in the form of $10 bundles. These bundles range from 10 to 17 channels and allow customers to opt into (or out of) channels like sports and Nickelodeon.
In light of HBO’s recent game-changer, isn’t this a good thing?
Not if you’re a suit at ESPN.
That’s because ESPN and ESPN2 would be relegated to optional sports packages. In a statement to Recode, ESPN said, “Media reports about Verizon’s new contemplated bundles describe packages that would not be authorized by our existing agreements. Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.”
If you’re not a cable-cutter, your subscription comes with lots of invisible strings attached. Powerhouses like ESPN can mandate that less-popular channels be included into subscription packages.
Verizon’s announcement of quasi-á la carte options was surprising because it seemed to ignore these stipulations, which sat at the core of the industry’s business model for decades. This convoluted bundling is exactly the reason you have 400 channels you don’t want, including that channel that only seems to run marathons of Celebrity Babysitters: Australia.
It’s also worth noting that, despite colossal advertising revenue, ESPN hogs an astounding amount of your monthly cable bill.
It bears emphasizing, especially to you non-sports fans: Each month, $6 of your cable bill goes to pay ESPN’s mafia-level licensing fees. That’s 43 times higher than the median cost per channel of $0.14.
Verizon is one of America’s most reviled corporations because it is a bloated entity in a stifling duopoly that offers its subscribers garbage service. These “small bundles” are actually just weak half-measures in a losing fight against online streaming.
But let’s award credit where credit is due — not every American cares about sports. Personally, I could not name more than three NHL teams. So why should I have to pay ESPN $6 per month for the privilege of skipping their channel?
Verizon FiOS president Tami Erwin told the Wall Street Journal that the company expects their new plans “to be in a position of compliance” with its existing programming contracts.
But with no new offerings on its website, FiOS may have spoken too soon.