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Disney Says Verizon's Bundle-Breaking Pay TV Plan Breaks Its Rules

Verizon's plan is "not ... authorized," says ESPN PR.

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Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

About that Verizon plan to break up the pay TV bundle into smaller bundles?

Not so fast, says Disney’s ESPN. Verizon’s plan, which it’s supposed to start marketing this weekend, violates agreements the programmer has with Verizon’s Fios TV unit, according to ESPN.

Here’s the statement from an ESPN spokesperson: “Media reports about Verizon’s new contemplated bundles describe packages that would not be authorized by our existing agreements. Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.”

I’ve asked ESPN PR what they intend to do next, and Verizon PR for a response.

Verizon’s plan, announced late last night, is supposed to give pay TV customers more choice by selling a base package of TV networks along with “channel packs,” grouped by themes like sports and lifestyle, that consumers can swap out each month.

While it’s unclear how appealing that proposal may be to pay TV customers, the fact that Verizon had seemingly figured out how to break up the bundles that programmers have insisted on selling for years seemed significant.

As I wrote last night: “What’s more interesting is that Verizon has been able to convince some programmers to let them carve up their bundles, which have been the foundation of their business models for years. Disney, for instance, usually insists that pay TV providers that sell ESPN also sell channels like the Disney Channel; Verizon’s deal lets subscribers get one without the other.”

But ESPN’s statement — which complains specifically about having its networks relegated to an optional sports tier, instead of being included in the base package — suggests that Verizon never got an agreement from the programmer before it announced its plan. A person familiar with another programmer included in Verizon’s offering said that programmer hadn’t signed off on Verizon’s plan either. That person suggested that Verizon thought its agreements allowed it to try different offerings as a limited test.

Earlier today Verizon rep Alberto Canal told me Verizon had received authorization from all of the programmers included in its new plan. I later asked him to confirm that, but haven’t heard back. In a story published yesterday, the Wall Street Journal reported that Verizon Fios head Tami Erwin said the company “expects to be in a position of compliance” with its existing programming agreements.

Here’s the list of channels Verizon said it intends to sell as part of its base package and channel packs:

Verizon channel packs

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