Daily Management Review

Cable war intensifies with Verizon's slim package launch


04/22/2015




US-based mobile and internet service provider Verizon Inc has launched customized smaller TV channel packages much to the ire of leading cable channel providers.
 
Already the company has faced objections from ESPN over the slim packages. This new offering to Verizon’s FiOS customers lets consumers subscribe to a smaller list of "core" channels and then add on themed packs with extra networks. According to Verizon, this package will give users the freedom to add packages according to their interests. With increasing number of consumers shunning the cost of huge bundles of cable channels, Verizon has realized that such customized packages is the choice of the future, with online streaming services such as Netflix and Hulu crowding the market and providing such features.
 
But ESPN has objected on the grounds that such slimming down of its channel ranges is not part of the company agreement with Verizon. Now the war has intensified further with the addition of other major cable companies including NBC and Fox.
 
 Verizon allows users to pick 35 basic channels that include local networks, CNN and The Food Network. They can then add on additional channels grouped by interests such as sports and children’s TV. Fox, which is owned by 21 Century Fox, and NBC, which is owned by Comcast, argued that Verizon’s service violates current licensing agreements. Some of the networks raised concerns that the offer was not discussed with them prior to the announcement.
 
“We reject Verizon’s view that it can pursue the new packaging scheme it announced yet still comply with our agreements,” Fox said in a statement about the inclusion of Fox Sports 1 in the sports package. NBC also said in a statement that “Verizon’s announced ‘Custom TV’ package does not comply with our existing agreement.” Separately, Viacom Inc., which owns MTV, Nickelodeon and Comedy Central, sent a letter asking Verizon to clarify its position.
 
Meanwhile, Verizon spokesperson Deidre Hart said: “As far as we are concerned, there is no dispute. “FiOS Custom TV is a product consumers want, and it’s all about consumer choice. We believe we are allowed to offer consumers and small businesses this choice and flexibility under our existing contracts.”
Verizon, the nation’s largest wireless carrier, delivers cable television through its FiOS service to almost 6 million subscribers. When compared to Netflix’s 57 million subscribers, the skewed numbers reflect the changes in consumer’s choice.
 
 






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