Verizon's FiOS service started selling their Custom TV in late April, which gives a $55/month package of 45 base channels, plus a customer's choice of two minor sets of entertainment, news, sports, or kids' offerings. Customers can also add $10 per other tier. However, the difference in Verizon's Custom TV is that customers can choose not to buy cable sports programs, such as those from Walt Disney, 21st Century Fox, and NBCUniversal. This reportedly dismayed such companies, with ESPN suing Verizon.
Of what is perceived to be a discreet change done by Verizon, Bloomberg thinks that this disturbs a system used by media companies, with sports channels, to rake big profits for a very long time. In the usual big bundle offers, sports channels are a "forced part of the deal," and Disney's ESPN, Fox Sports, and others are the beneficiaries of it.
With Verizon's move, Disney is the most affected because ESPN reportedly charges cable operators the largest monthly cost per-subscriber of any programming service. Disney's ESPN alone is predicted to have a profit of $7.5 billion from pay-TV operators in 2015, according to SNL Kagan.
This also seemed to have angered Disney as the company, through ESPN, sued Verizon in a New York state court. More than that, Disney stopped all their owned TV and radio stations from advertising in Verizon's Custom TV options. NBCUniversal and Fox Sports also criticized Custom TV.
The effect of Verizon's move did not only affect media network's profits but as well as the control that network companies have in "negotiating the distribution of their less-popular pay-TV channels."
TV analyst Erik Bannon reportedly said, "Verizon has broken the traditional paradigm. If Verizon wins, this could mean billions of dollars in lost revenue for Disney."
If others see Verizon's move as upsetting "everyone in the entertainment industry," CBS reportedly doesn't see it as a risk.
Forbes also said, "Verizon, in turn, effectively shook things up, legally or not."
Verizon did not only angered Disney, the company also potentially annoyed Comcast Corporation, Fox (though 21st Century Fox refused to sue Verizon), and Time Warner Inc.
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