Cable TV wants to put its packages — so-called “skinny” bundles of channels — on a diet to make them more affordable to cord-cutters, but one fat, deep-fried doughnut keeps getting in the way: ESPN.
That’s because ESPN requires cable operators to put the channel on their cheapest, most basic tiers, but ESPN costs nearly $7 alone, according to an estimate from SNL Kagan, meaning the “skinny” bundle isn't so skinny after all.
This played out last spring when ESPN slapped Verizon Communications with a lawsuit for not including it in the basic skinny bundle it called “Custom TV,” which was to cost $55 without ESPN. You could still choose to get ESPN at no extra cost in an add-on package, but ESPN and parent company Disney held that that kind of move was nevertheless a violation of their carriage agreement, and sued Verizon.
Now, a year later, Verizon has rejiggered its “Custom TV” FiOS package to offer two basic options — and one includes ESPN and other sports networks. The two new packages will have the same number of channels and cost the same, starting at $65 just for TV service. It would appear to be a compromise of sorts on both sides, but the reality remains the same: Cable TV subscribers are paying a heavy premium for ESPN even if they never watch sports.
While neither Verizon nor ESPN would comment on whether the suit has been put to bed, we can now infer that the Worldwide Leader in Sports got its way: Verizon announced the switch to two basic custom bundles this weekend. At the company’s last earnings call, Verizon Communications Chief Financial Officer Fran Shammo would only say of ESPN, “They’re a great partner of ours; we will continue to work with them.”
While the Custom TV “refresh” is certainly a win for ESPN, Verizon had to raise the price for all subscribers even if they don’t pick ESPN. Thus the increased overall price of the Custom TV bundle; you are still, in essence, paying for sports networks, whether you want them or not.
“We are encouraged by the changes that Verizon has made to Custom TV,” ESPN said in a statement. “We expect the vast majority of Verizon subscribers to continue to get ESPN as part of their Extreme HD or Preferred HD package and we welcome the opportunity for additional subscribers to enjoy ESPN and ESPN2 as part of the new entry-level Custom TV offering.”
This seems like splitting hairs, but for ESPN, which is bearing the brunt of Wall Street’s cord-cutting fears, the difference is a big one. By making sure it’s included in at least one basic skinny bundle, the network not only keeps its subscriber numbers from decreasing further, it also trains customers and companies to expect ESPN in basic packages, regardless of size.
ESPN President John Skipper has indicated at several recent events, including last week’s Code/Media Conference, that he isn’t exactly anti-skinny — his networks, after all, are included in internet-only TV offerings like Dish Network’s Sling TV and Sony’s PlayStation Vue.
A network with less firepower behind it would have fared worse in the Verizon scuffle; because ESPN is part of the Disney family, it has a little more leverage. This is a double-edged sword: While being part of a massive suite of channels means more weight to throw around, they also have much more to lose if a provider like Comcast or Dish plays hardball and allows the channels to go dark.
How much Disney would lose remains up for debate. A December study from research firm Digitalsmiths said that less than 40 percent of the people surveyed would include ESPN in a cable package created on their own; as a counter, ESPN in February touted its status as the network cable operators value most.
There’s a larger lesson to be learned here, though. ESPN aside, if you actually look at the networks you’re getting in these “skinny” bundles, the illusion of choice begins to unravel.
Verizon FiOS’ “Custom TV Essentials” package that doesn’t have any costly sports networks includes such questionable “essentials” as shopping channel EVINE Live, bluegrass-centric BlueHighways TV and C-SPAN 3.
You can try to put a bundle on a diet, but it’ll never be as skinny as you want.