Verizon Changes the TV Conversation

Hey, TV networks: Two can play at this game. That may be the not-so-subliminal message underlying Verizon Communications’ move to offer subscribers smaller bundles of TV channels through its FiOS TV service. Under the new plans, customers get broadcast channels and a handful of other “base” networks. They can then select from among channel packs organized around themes, such as children’s channels, sports and news and information. The new offering, which became available on April 19, comes after recent moves by media networks such as Time Warner ’s HBO, CBS and Viacom ’s Nickelodeon to offer their channels directly to consumers via the Internet. Those threaten pay-TV providers’ relationships with video consumers.

For Verizon, giving consumers greater choice over channels -- even if it isn’t a full a la carte offering -- may mean the difference between a customer and a cord-cutter. The new plans may also serve as a reminder to content owners that they don’t hold all the power. Companies such as Walt Disney, whose ESPN is relegated to a package with other sports channels, run the risk some subscribers won’t sign up. That could undermine the conventional wisdom that ESPN’s popularity means pay-TV providers have no choice but to carry it and pay its high fees. And this may become a flash point. ESPN says its agreements specify that neither ESPN nor ESPN2 may be distributed in a separate package and that Verizon’s offering isn’t authorized under its contract. Verizon says the offering was designed to avoid violating agreements.