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Verizon Shift to 'Skinny Bundles' Sparks War With Media Giants

Image: Verizon Shift to 'Skinny Bundles' Sparks War With Media Giants
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By    |   Wednesday, 22 Apr 2015 02:41 PM

The fallout from last week's announcement by Verizon Communications that it would offer less costly, a la carte bundles to its FiOS customers continued with Fox and NBC Universal becoming the latest media giants to voice opposition to the proposal.

Fox, which is owned by 21st Century Fox, and NBC, which is owned by Comcast, assert that the new "Custom TV" violates current licensing agreements.

"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 issued Tuesday, according to the Los Angeles Times.

The plan launched on Sunday and would permit consumers to purchase a base package for about $55 of channels, which includes 35 channels like CNN, AMC and Fox News, as well as two additional channel tiers which could be tailored to specific interests, such as sports or children's programming. The announcement drew almost immediate responses from the broadcast networks and major media companies.

Shortly after Verizon unveiled the new bundle, Walt Disney Co.’s ESPN argued that breaking up the bundle "would not be authorized by our existing agreements" which require ESPN and ESPN to be included in the core package.

"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," the company said in a statement, according to recode.net.

Verizon is not backing down, nor do executives have any intention of retracting the offer.

"We have launched the product, we are not retracting it, and we believe we are in our legal rights to launch it," said Verizon Chief Financial Officer Fran Shammo said in an interview with The Wall Street Journal.

The response from the major media companies and broadcasters came as no surprise, but some industry analysts downplay the magnitude of Verizon's move toward a la carte bundling.

"Is this an industry game changer? Not in itself, but it may trigger change. If traditional TV network bundles are indeed broken, there may be an important evolution towards de-bundling starting higher up in the value chain," writes Forbes contributor Nelson Granados.

Granados does believe the new package is a positive sigh in that it "may be chipping away at networks’ contracted bundles with distributors," and that might foster a move toward truly a la carte plans.

Nomura analyst Adam Ilkowitz says the shift to more consumer choice is a response to the challenge posed by streaming services such as Netflix.

"This is more of an evolution than a revolution. This is not Verizon saying the bundle is dead — there's still a lot of bundling attached to it. This is an acknowledgment that consumer preference is maybe shifting," he told The Associated Press.

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The fallout from last week's announcement by Verizon Communications that it would offer less costly, a la carte bundles to its FiOS customers continued with Fox and NBC Universal becoming the latest media giants to voice opposition to the proposal.
Verizon, fox, nbc, bundles
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2015-41-22
Wednesday, 22 Apr 2015 02:41 PM
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