Verizon, ESPN Reach Settlement on Pay-TV Channel Package -- Update
11 May 2016 - 3:03AM
Dow Jones News
By Shalini Ramachandran
Verizon Communications Inc. and ESPN said they have reached a
settlement in their yearlong legal dispute over how the sports
network is distributed.
ESPN, which is majority-owned by Walt Disney Co., filed a
lawsuit against Verizon in April 2015 over so-called "Custom TV"
packages that the phone giant's FiOS unit had started selling to
customers. Those packages allowed people to buy a basic set of
channels, including broadcasters and some cable networks, and layer
on tiers of channels in genres like sports and kids. At issue was
that customers could get a basic package of channels that didn't
include ESPN, which the sports network said violated its contract.
ESPN had argued that while distributors have the right to exclude
its networks in packages, it can't be put into a separate add-on
sports tier.
Terms of the settlement weren't disclosed.
In February, Verizon revamped its base packages to include one
with sports channels like ESPN and one without -- a move widely
viewed as an olive branch to ESPN. A week later, court proceedings
in New York Supreme Court were postponed while the companies tried
to negotiate a settlement. Verizon says uptake for its skinny
bundles has increased after modifying the plans.
The issue of how channels are packaged has been front and center
as media companies grapple with pushback from consumers over higher
cable bills and competition from streaming services like Netflix
and Hulu. ESPN, the most expensive cable network, has been left out
of several cheaper channel packages over the years. As more people
"cut the cord" or downgrade to less-expensive plans, the Disney
network has experienced subscriber losses that have caught Wall
Street's attention.
Disney Chief Executive Bob Iger said in February that the
company was in talks with new and existing distribution partners
"to create an array of innovative new services and light packages
featuring ESPN." Disney is expected to report its latest quarterly
earnings results after the market closes Tuesday.
Ryan Knutson contributed to this article.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
May 10, 2016 12:48 ET (16:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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