I mentioned last week that the WWL was more than a trifle miffed with Verizon’s new Custom TV package, which allowed customers to choose basic cable packages that didn’t include ESPN – sacrilege, I know.
Anyway, it seems Verizon didn’t take the hint. So Mickey is taking things to the next level.
ESPN filed a lawsuit against Verizon in New York Supreme Court on Monday, asserting that the telecommunications company breached its contract with the network when it unveiled a new cable package last week.
On April 19, Verizon introduced a cable package that took channels normally available on basic cable — networks like ESPN, Comedy Central and USA — and separated them into smaller, category-specific groups like sports, entertainment and children’s programs that customers can choose from. Verizon introduced the package with apparently little to no discussion with these cable networks. Disney, which owns ESPN, complained that Verizon made a “unilateral” decision.
What this is all really about is streaming. Netflix and similar enterprises are eating into what cable and satellite broadcast providers market because they’re cheaper. Funny how that works.
This is a fight over preserving market share in a changing market.
“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,” an ESPN spokeswoman said. “We simply ask that Verizon abide by the terms of our contracts.”
Verizon is not backing down.
“Consumers have spoken loud and clear that they want choice, and the industry should be focused on giving consumers what they want,” a Verizon spokeswoman said in response to the lawsuit. “We are well within our rights under our agreements to offer our customers these choices.”
Sometimes, we consumers sure can be a pesky lot.
The longer trend doesn’t favor ESPN. Even if the network prevails and stops Custom TV for the moment, there’s always the next contract to fight over. And consumer choice ain’t going away.
The reason you should pay attention to this fight isn’t just because you’re a consumer. It’s also worth watching to see if it eventually impacts the conference broadcast business model, particularly the Pac-12’s, but also to a lesser extent, the Big Ten’s, as both have ownership interests in their conference networks. In any event, if things reach a point where these networks have to stand on their own as part of a special platform, as opposed to being ladled in with basic coverage, that’s likely to be problematic. It’s one thing to see the cost of the Big Ten Network subsidized and pushed to viewers at a lower cost. It’s another to ask those viewers to pay for the package on its own at a cost several multiples higher than it is now.
What happens to college athletics if the money spigot from broadcast revenues slows? Think of all the money-driven decisions that have been made over, say, just the last five years. College football has been modified in substantial ways over that time. If the cash flow begins to dry up, there will be plenty of unpleasant ramifications. And I doubt the geniuses who have driven things to this point are even thinking about those yet.
UPDATE: Brian Cook, on the Big Ten…
… Right now sports is being subsidized by people who don’t care about it at all. In an a-la-carte world that no longer happens.
Then what? Then ESPN takes a bath, with sports leagues next on the chopping block. ESPN costs 6 bucks a month for a channel 20% of people are interested in; it will not cost thirty bucks a month in an a-la-carte world because a lot of people will forgo it. There’s only so much you can do by strong-arming customers in an environment where ten bucks a month gets you a virtually infinite pile of content. The people who don’t care will opt out.
This is why adding questionable fanbases to the Big Ten in the pursuit of short-term cable dollars was so incredibly foolish even beyond the deleterious effects of adding a bunch of games nobody in the world cares about. Every time I see someone hail Jim Delany as some kind of visionary I want to laugh/cry.
Give this a few years, and I suspect he’ll be far from alone.