ESPN Says Verizon's New FiOS Channel Options Violate Contracts
summary - Verizon has added more flexibility (unless you really cut down on the channels to a very basic level, inconclusive as to whether this will save a subscriber money) to their TV package options and has unbundled EPSN/EPSN2. ABC/Disney says this violates their distribution contract with Verizon.
future - I expect this to end up in the courts. Bundling is what has driven up cable costs the last 15 years. Unbundling will cause individual channel costs to rise dramatically, and we will probably end up at a price that was very similar to where we started, for fewer channels. But, it at least gives consumers freedom/choice.
April 20th, 2015 at 10:16 AM ^
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April 20th, 2015 at 10:25 AM ^
But...but...but...what about the saying that the customer is always right?!?
April 20th, 2015 at 10:36 AM ^
Consumer is almost always on the losing end because of "capture."
http://en.wikipedia.org/wiki/Regulatory_capture ; http://www.nytimes.com/2015/04/13/opinion/conflicts-of-interest-at-the-…
Oh, and capitalism doesn't actually work super well for the little guy w/out the Shearman Act, assuming the government actually enforces the Act--we'll see if the Comcast Time Warner merger goes through.
April 20th, 2015 at 12:53 PM ^
April 20th, 2015 at 10:20 AM ^
April 20th, 2015 at 10:21 AM ^
Never thought I'd say this but Team Verizon here.
April 20th, 2015 at 10:21 AM ^
I heard about this on the drive in - will be very interesting to see how this plays out. Apparently Verizon didn't consult with any of their content providers before their announcement, which is a bit shocking. CNBC is speculating that they did that to provoke a response from consumers, who are likely to be on their side, and let the content providers essentially be painted as the bad guys in the court of public opinion.
Fairly risky strategy - not sure the first-mover advantage will be worth publicly strong-arming their suppliers, but I agree it ends up in the courts. Unfortunately I also agree with LandryHD's comment above: however this shakes out, I doubt it will lead to lower prices for any of us. The pie will be cut a different way at the top.
April 20th, 2015 at 10:32 AM ^
crap. Seriously, some of the channels we have are the TV version of the vanity press.
April 20th, 2015 at 10:55 AM ^
They include those channels because they don't cost much. Whereas ESPN gets around $5.75 per subscriber, they only get $0.74 for ESPN2, and $0.21 for ESPNU. Channels like TNT ($1.28) or Fox Sports 1 ($0.68) don't really cost that much either. TruTV is $0.10. Most of the small channels people hate at are around a quarter per month or less. So unbundling and droppping them doesn't really save much.
This whole thing is a really slippery slope for consumers, and a real case of be careful what you wish for. A la carte is almost always more expensive than bulk shopping.
A real easy way this could go over the next decade or so is ESPN going the route of HBO and offering a stand alone service for like $10-15/month for just ESPN (or $20/month for all the ESPN networks, or $25/month for the entire Disney lineup), and then selling the individual games as a pay per view style option. Think about what a marque event like the Pacquiao-Mayweather event goes for, and what a big college football game would cost to watch. People would be longing for a return to bundling real quick.
April 20th, 2015 at 11:12 AM ^
April 20th, 2015 at 11:42 AM ^
April 20th, 2015 at 12:06 PM ^
It'll save the people that really only want 10 channels like 20-25% on their bill. Instead of paying $70 for internet and $60 for cable, they'll pay $70 for internet and $25 for cable. And that's only assuming the cable companies don't jack up the price of your internet service for dropping most of the cable channels they offer. Or if they don't introduce some sort of hardware you have to rent to unbuddle for $10/month. None of these companies will go into an unbundled future without finding a way to make more money from it.
April 20th, 2015 at 10:38 AM ^
Just to clarify -- bundling as a telecom industry terms is used to describe offering different types of service (cable/phone/internet) to consumers under one contract. It is not typically used to describe the packaging of different stations together in cable tiers.
And with that point, for many Americans, it is certainily bundling which causes prices to rise, as providers use monopoly power in one of their lines of service to subsidize another. For example, where I live Comcast is the only high-speed internet provider. 70% of my $110 monthly bill goes to pay for my 20/3 service (which rarely hits 20/3, and has outages about once per month.) My cable costs are a whopping $33, despite my very large selection of stations. I'm very sure that Comcast pays the various cable stations more on a per subscriber basis than I pay them monthly, but they can gouge me in the monopoly market of internet to keep me, and at the same time keep me from going to a satellite option for cable, because it's not cost effective.
In other areas of the country (and I actually keep track of telecom prices as part of my job), this ratio is reversed, if Comcast/Verizon/whomever has more monopoly power in another service type (cable instead of internet, for example). Cross-product subsidization is a gold mine for companies.
Accordingly, this pricing strategy probably shifts money from Disney to Verizon, and not at all to consumers.
On a related note, look at your cable bill and see if you have a new fee for "Regional Sports Networks." It's a fee that a lot of companies have started to add to existing accounts over the last year.
April 20th, 2015 at 12:30 PM ^
That's bad. I live in NY and have FIOS. They are working hard to steal customers from cable and satellite. I pay $150/month for 150/150 high speed internet, which is awesome and necessary as I work from home and use my internet connection for video conferencing, working with large datasets, and I stream a lot of movies too. I also have the 2nd highest level of TV service, so I can get more sports channels.
The part that's irreplacable--the stuff you want to watch--they produce. The means of distribution? As long as it's reasonably convenient and priced well, then I don't care.
Cut out Verizon. Disney has the $$$ to fund a build out of the centralized servers for streaming (at say, selected spots across the country to minimize latency). Verizon, meanwhile, has the local wire to bring the internet/cable to your door, but soon, no one is going to care about the cable part, methinks.
April 20th, 2015 at 10:38 AM ^
how to feel about this. I don't like ESPN or Verizon.
It's kinda like voting... hold your nose and pick a side. Seriously, I'm thinking of supporting Verizon on a price-related issue???? The armageddon is surely upon us!
April 20th, 2015 at 10:43 AM ^
Capitalism 101 - consumers will simply opt for cheaper options. New products will follow evolved markets. The music biz slept on this general principle and never recovered.
After cuttling the cord in 2011 or so, I occasionally look at cable (mostly for faster internet) or restablishing my DirectTv (for Sunday Ticket or to allow my father in law to be able to flip channels when they visit). But it's too expensive. Especially for the few channels I actually watch.
April 20th, 2015 at 10:43 AM ^
and Verizon.
April 20th, 2015 at 10:52 AM ^
It is the dawn of an entirely restructuring of visual entertainment. If Netflix can produce a show (Daredevil) as good as any on regular TV, then throw the whole business model out the window. As a consumer, I'd pay a bit more for stuff I want, as long as I don't have to buy all that crap. Really, between the kids and myself, we watch maybe 15-20 channels tops on cable -- all the rest of it is usually just noise to us. And I surf a lot, but rarely find anything else interesting.
BTW, if you haven't seen Daredevil, it's like Marvel's take on Breaking Bad -- that was kind of how I reacted to it. Definitely go watch it.
April 20th, 2015 at 11:09 AM ^
April 20th, 2015 at 11:13 AM ^
is great TV!
April 20th, 2015 at 11:15 AM ^
I am only on Episode 4 but Daredevil starts cooking Meth and wacking kids?
Last year was the military documentary phase. I'm just moving into the vintage movie phase.
I check meTV, Movies!, TCM, Sundance, Reelz. I have to say the Rotten Tomatoes scores along with a cursory knowledge of old movie stars and titles have led to some good selections. Just recently, I've watched "In the Heat of the Night" (Sidney Poitier), Razor's Edge (Gene Tierney--there's a hotter Megan Fox from the past), Kansas City Confidential (John Payne--from the Miracle on 34th Street). And some more recent (Princess Bride, Little Fokkers).
Some of these type are on Netflix, but I find more on the offbeat cable channels that make their money with 5+ minute commercial breaks. (Which I skip, of course).
April 20th, 2015 at 11:38 AM ^
I doubt Verizon will win in the end, and regardless, the day in which Verizon is treated as the white knight defending consumers from price gouging doesn't seem like reality.
April 20th, 2015 at 12:24 PM ^
Some people are excited for this, but in this new age where live programming is the most valuable property on TV, sports fans will be the biggest loser in a comprehensive reshuffling of the industry.
April 20th, 2015 at 12:29 PM ^
Bundling is what has driven up cable costs the last 15 years. Unbundling will cause individual channel costs to rise dramatically, and we will probably end up at a price that was very similar to where we started, for fewer channels.
We will probably end up with fewer channels but I think in the long run it will end up cheaper for people who aren't sports fans. Unfortunately, I think that it will be more expensive for us. It is my impression that the non sports fans of the world are subsidizing us sports fans. That can't go on forever.
I don't think this ends up cheaper for anyone, unless they truly only watch 1-2 channels. Current prices are what they are per channel because they all come together, and so the network can offer advertising across all channels. Providers pay their fees because the extra channels offer extra views, even if they are "niche" channels with smaller bases.
What do you think happens when NBC no longer groups USA and all of their other channels together for advertising? The small channels probably die off. Providers probably won't be happy paying as high of rights fees now that they know exactly how many people actually care about each channel. And the networks will have to jack rates in order to cover the difference.
I hate everything about ESPN and begrudgingly watch only live sports events.
ESPN’s subscriber price is $5.54. 400% more than next most expensive national network.
Sports is the only thing keeping this cable scam alive. Otherwise folks would dump it and go Netflix, Hulu, OTA, etc.
Other than live sports, there's almost nothing separating Netflix from cable. I have hundreds of channels. I probably watch 2-3 of them for non-sports reasons