By Thomas Gryta And Joe Flint
Verizon's new TV packages are running into a bundle of
trouble.
On Tuesday, NBCUniversal and Fox joined ESPN in saying the
slimmer, cheaper packages of pay-television channels violated the
terms of their agreements.
The new packages, which launched Sunday, let subscribers sign up
for smaller packages of channels from broadcasters like ABC and
Fox, then add on packs of specialized programming like sports or
children' TV. Americans have been looking for opportunities to pick
and choose among channels, but the industry has moved slowly for
fear of upsetting long-lucrative arrangements.
Fran Shammo, chief financial officer at Verizon Communications
Inc., said in an interview the company believes it can offer sports
channel ESPN as an add-on package under its new plan and isn't
going to back down.
"We have launched the product, we are not retracting it, and we
believe we are in our legal rights to launch it," he said.
Walt Disney Co.'s ESPN objected last week to Verizon's new
offering, which it argues separates it from the core lineup. 21st
Century Fox unit Fox also objected.
"We reject Verizon's view that it can pursue the new packaging
scheme it announced yet still comply with our agreements," a
spokesman said Tuesday.
Until mid-2013, 21st Century Fox was part of the same company as
News Corp, owner of The Wall Street Journal.
Comcast Corp. unit NBCUniversal also said the Verizon offering
falls outside the terms of their contract.
The disputes put Verizon at odds with major programmers at a
time when the pay-television industry and content companies are
experimenting with a variety of new approaches as viewers migrate
to the Internet. The steps are tentative thus far.
Verizon defended its moves Tuesday, saying "it is a product
consumers want, and it is all about consumer choice."
Verizon is a major provider of traditional pay TV via its FiOS
service and is working on an "over the top" service that will be
delivered primarily to mobile devices.
Write to Thomas Gryta at thomas.gryta@wsj.com and Joe Flint at
joe.flint@wsj.com
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