Business

ESPN Suing Verizon Over Unbundling of its Sports Channel

Published

9 years ago

April 28, 2015

This Sept. 16, 2013 photo shows the ESPN logo prior to an NFL football game between the Cincinnati Bengals and the Pittsburgh Steelers, in Cincinnati. ESPN on Monday, April 27, 2015 filed a lawsuit against Verizon in an escalating clash over how the popular sports channel is being sold in a discounted pay-TV package. (AP Photo/David Kohl)

MICHAEL LIEDTKE, AP Business Writer

ESPN is suing Verizon in an escalating clash over how the popular sports channel is being sold in a discounted pay-TV package.

The complaint filed Monday in New York’s state Supreme Court alleges Verizon is breaking its contract with ESPN, owned by Walt Disney Co., by unbundling the sports channel from the main programming line-up of Verizon’s FiOS TV.

The legal showdown could have ripple effects on how other pay-TV programming is packaged. Cable and satellite services are scrambling to retain subscribers as the advent of Internet video spawns new and less expensive ways to stay entertained and informed.

Verizon is allowing customers to subscribe to a bare-bones package of 35 channels for $55 per month, with the option of adding other two other tiers of programming such as a sports package that includes ESPN. The streamlined packages are meant to appeal to budget-minded consumers weary of paying for dozens of TV channels that they rarely watch.

Pay-TV providers such as Verizon are under pressure to give subscribers cheaper and more flexible choices as they face intensifying competition from Netflix, Hulu, Amazon.com and other online services that stream TV series and movies over high-speed Internet connections.

Those market forces prompted Time Warner Inc.’s HBO, a long-time staple in pay-TV lineups, to recently begin selling an Internet-only service for $15 per month.

“Verizon’s current skirmish speaks to the trouble distributors will have in creating a slimmer package that is attractive both from an economic and content perspective,” MoffettNathanson Research wrote in an analysis Monday.

ESPN is fighting Verizon’s discounted “custom TV” package because it gives subscribers the option of bypassing the sports channel in their programming selections. That violates pay-TV requirements stipulating that ESPN be included in the main bundle of programming, according to ESPN. Despite the alleged breach of contract, ESPN hasn’t yet pulled its channel from the sports pack that Verizon is selling as part of its discounted service.

New York-based Verizon Communications Inc. denies its new options break its ESPN contract. “Consumers have spoken loud and clear that they want choice, and the industry should be focused on giving consumers what they want,” the company said in response to ESPN’s lawsuit.

In its statement, ESPN said it favors innovation as long as it doesn’t violate existing agreements. The sports channel recently worked out a deal that enabled Dish TV’s Sling service to include ESPN and ESPN2 in an Internet video service that costs about $20 per month. ESPN is included in the main programming line-up of Sling, though.

While ESPN took Verizon to court, CBS Sports Network disclosed plans to join Verizon’s separate sports package beginning May 1.

Few details of ESPN’s claims against Verizon were available Monday because the material in the lawsuit is currently considered confidential.

ESPN is highly prized by pay-TV providers and advertisers because the channel has the rights to a variety of major professional and college sports that still command large audience who watch the programming live instead of on DVR recordings that let viewers skip the commercials.

The sports channel’s allure has established ESPN as the most expensive channel in basic pay-TV channels, based on estimates from data provider SNL Kagan. ESPN charges pay-TV distributors $6.61 per monthly subscriber compared to just $1.65 per subscriber for the second most expensive basic channel, TNT.

___

AP Business Writer Tali Arbel in Washington contributed to this story.

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Google’s New Deal with California Lawmakers and Publishers Will Fund Newsrooms, Explore AI

Gov. Gavin Newsom, California lawmakers and some newspaper publishers last week finalized a $172 million deal with tech giant Google to support local news outlets and artificial intelligence innovation. This deal, the first of its kind in the nation, aims to invest in local journalism statewide over the next five years. However, the initiative is different from a bill proposed by two legislators, news publishers and media employee unions requiring tech giants Google and Meta to split a percentage of ad revenue generated from news stories with publishers and media outlets.

Published

4 days ago

October 1, 2024

Oakland Post

iStock

By Bo Tefu, California Black Media

This deal, the first of its kind in the nation, aims to invest in local journalism statewide over the next five years. However, the initiative is different from a bill proposed by two legislators, news publishers and media employee unions requiring tech giants Google and Meta to split a percentage of ad revenue generated from news stories with publishers and media outlets. Under this new deal, Google will commit $55 million over five years into a new fund administered by the University of California, Berkeley to distribute to local newsrooms. In this partnership, the State is expected to provide $70 over five years toward this initiative. Google also has to pay a lump sum of $10 million annually toward existing grant programs that fund local newsrooms.

The State Legislature and the governor will have to approve the state funds each year. Google has agreed to invest an additional $12.5 million each year in an artificial intelligence program. However, labor advocates are concerned about the threat of job losses as a result of AI being used in newsrooms.

Julie Makinen, board chairperson of the California News Publishers Association, acknowledged that the deal is a sign of progress.

“This is a first step toward what we hope will become a comprehensive program to sustain local news in the long term, and we will push to see it grow in future years,” said Makinen.

However, the deal is “not what we had hoped for when set out, but it is a start and it will begin to provide some help to newsrooms across the state,” she said.

Regina Brown Wilson, Executive Director of California Black Media, said the deal is a commendable first step that beats the alternative: litigation, legislation or Google walking from the deal altogether or getting nothing.

“This kind of public-private partnership is unprecedented. California is leading the way by investing in protecting the press and sustaining quality journalism in our state,” said Brown Wilson. “This fund will help news outlets adapt to a changing landscape and provide some relief. This is especially true for ethnic and community media journalists who have strong connections to their communities.”

Although the state partnered with media outlets and publishers to secure the multi-year deal, unions advocating for media workers argued that the news companies and lawmakers were settling for too little.

Sen. Mike McGuire (D-Healdsburg) proposed a bill earlier this year that aimed to hold tech companies accountable for money they made off news articles. But big tech companies pushed back on bills that tried to force them to share profits with media companies.

McGuire continues to back efforts that require tech companies to pay media outlets to help save jobs in the news industry. He argued that this new deal, “lacks sufficient funding for newspapers and local media, and doesn’t fully address the inequities facing the industry.”