Media Giants Balk at New Verizon TV Bundles -- Update

By Thomas Gryta And Joe Flint 

Verizon's new TV packages are running into a bundle of trouble.

On Tuesday, NBCUniversal and Fox joined ESPN in saying the slimmer, cheaper packages of pay-television channels violated the terms of their agreements.

The new packages, which launched Sunday, let subscribers sign up for smaller packages of channels from broadcasters like ABC and Fox, then add on packs of specialized programming like sports or children' TV. Americans have been looking for opportunities to pick and choose among channels, but the industry has moved slowly for fear of upsetting long-lucrative arrangements.

Fran Shammo, chief financial officer at Verizon Communications Inc., said in an interview the company believes it can offer sports channel ESPN as an add-on package under its new plan and isn't going to back down.

"We have launched the product, we are not retracting it, and we believe we are in our legal rights to launch it," he said.

Walt Disney Co.'s ESPN objected last week to Verizon's new offering, which it argues separates it from the core lineup. 21st Century Fox unit Fox also objected.

"We reject Verizon's view that it can pursue the new packaging scheme it announced yet still comply with our agreements," a spokesman said Tuesday.

Until mid-2013, 21st Century Fox was part of the same company as News Corp, owner of The Wall Street Journal.

Comcast Corp. unit NBCUniversal also said the Verizon offering falls outside the terms of their contract.

The disputes put Verizon at odds with major programmers at a time when the pay-television industry and content companies are experimenting with a variety of new approaches as viewers migrate to the Internet. The steps are tentative thus far.

Verizon defended its moves Tuesday, saying "it is a product consumers want, and it is all about consumer choice."

Verizon is a major provider of traditional pay TV via its FiOS service and is working on an "over the top" service that will be delivered primarily to mobile devices.

Write to Thomas Gryta at [e-mail] and Joe Flint at [e-mail]

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