Networks Claim Verizon Skinny Bundle Violates Programming Contracts

It was inevitable that contract disputes would break out in the wake of the Verizon Communications decision to restructure programming options, creating “skinny bundles” that have optional content packs.

The reason is that standard contract clauses normally call for ad-supported networks to be carried on the “most popular” tiers of service. The new skinny bundles likely will not be the “most popular” tier of service.

The new packages start with a base package of about 35 channels, selling for $55 a month, but also including two of the optional channel packs, including themes such as children’s programming; sports; news; lifestyle; entertainment or popular culture.

So far, ESPN, NBCUniversal and Fox have said the new format violates their programming contracts with Verizon. Verizon says it is not going to back down, and is within its rights.

Verizon is not the only distributor to offer skinny bundles, but the other suppliers so far have been over the top providers. Make no mistake, this is a huge issue. If Verizon wins, we should expect to see more similar moves in the linear TV business, with a further shift in the fortunes of linear TV networks and distributors.

The Verizon Custom TV offer is the first offered by a linear TV distributor.  
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