Despite objections from ESPN, Verizon has pushed forward with the debut of Custom TV, a new offering for FiOS customers that lets them subscribe to a smaller list of "core" channels and then add on themed packs with extra networks as they see fit. The company is positioning Custom TV as an important step in giving customers more control over the TV they're paying for, which is truly a bizarre stance to hear coming from a mega-corporation like Verizon.
"No other subscription-TV service offers this level of personal control and value to consumers today," Verizon said in a press release. Viewers watch an average of 17 channels, according to stats from Nielson, so Verizon has trimmed the base package of Custom TV significantly. But don't confuse it with the cord cutter's dream of paying for TV a la carte; with Custom TV, you're getting a sizable bundle of around 50 channels. Most of the big broadcasters and important networks (like AMC) with plenty that most people are unlikely to watch. The stand-alone TV product is priced at $54.99 per month; a Triple Play package that adds internet and phone service runs higher at $74.99 monthly.
The core package of channels that comes with a Custom TV subscription.
ESPN says this isn't allowed under current deal
The most interesting thing about Custom TV is one network not included in the base subscription: ESPN. The hugely popular, Disney-owned sports channel has instead been split off into an add-on pack. Custom TV subscribers get to choose two add-on packs at no extra cost each month — and they can be changed every 30 days. ESPN will obviously be a default pick for most, but it's not guaranteed. There are seven Custom TV add-on packs in all: Kids, Pop Culture, Lifestyle, Entertainment, News & Info, Sports, and Sports Plus. The possibility of being completely excluded from FiOS in some homes has drawn ESPN's ire. By divorcing it from the main bundle of channels, Verizon is violating existing agreements between the two companies, ESPN insists. "Our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package," a spokesperson told Recode last week.
Looking at this list, it's not hard to imagine some FiOS customers passing on ESPN altogether. Viewers can pick two add-on packs with their monthly subscription at no cost. Go beyond two, and they cost $10 each.
Verizon disagrees. During an earnings call today, CFO Fran Shammo positioned his company as the good guy fighting to give you more flexibility. "This is a product that the consumer wants," he said. "It’s all about consumer choice. I mean, if you look at the TV bundles today, most people only on average watch 17 channels. So this is a way to give consumers what they want on a choice basis." On the subject of ESPN, Shammo said, "We believe that we are allowed to offer these packages under our existing contracts." He didn't expand beyond that, and it's very likely that the two companies remain deep in negotiation talks.
But at least on its face, this rift is a win-win for Verizon. Disney relies on the traditional, lucrative cable setup — which always includes ESPN regardless of your channel package — to subsidize its other channels and maximize their audience. Suddenly, Verizon has thrown a wrench into that model by trying to split cable into smaller packs. That's not to say Custom TV is radically cheaper than prior FiOS plans. You may not save much at all. Also, remember that most people can't even get Verizon FiOS, so it's not like Comcast or Time Warner Cable will be feeling any pressure to follow a similar course and carve up the bundle. But it's an interesting disagreement to witness, however short it may last.