A new Verizon TV-centric product has this problem.
Walt Disney and 21st Century Fox won’t be taking any TV advertising on its networks/platforms for Verizon’s new “custom” TV cable bundle, which essentially allows consumers to buy smaller groups of TV networks.
Disney and Fox believe Verizon is violating its traditional carriage agreements -- and its taking this ban on Verizon advertising. NBCUniversal has also voiced its objection to Verizon’s new plan.
Big TV-centric media companies hate to turn down big ad money -- especially from big TV advertising clients like Verizon, which has been a top 10 TV advertiser for a long time. It spent $810 million in TV advertising and $2.44 billion overall in advertising in 2013.
Verizon is selling new TV network packages where consumers don’t have to take regular ad-supported sports networks -- such as Disney’s ESPN; 21st Century Fox’s Fox Sports 1; and NBCUniversal’s NBC Sports Network.
These networks historically have been part of virtually all basic pay TV providers -- cable, satellite, or telco -- packages for decades. Traditional pay TV packages are virtually one size fits all -- some 100 to 200 channels, at one big price.
Now TV providers worry about consumers seeking alternatives, being able to pick and choose with new standalone TV services, either buying groups of networks (Sling TV, Sony Playstation Vue), or single channels (HBO Now, CBS All Access).
Verizon’s new custom packaging gives consumers the option of putting sports networks on a tier, where one would need to spend $10 extra a month.
High wholesale prices for ad-supported TV sports networks that cable, satellite, and telco TV providers pay for have been controversial. Many public interest groups see these networks as the main reason for ever-higher retail pay TV packages consumers for.
Verizon’s new custom TV bundles starts at $59.99 for a base package of 35 channels, plus two additional genre-based channel packs. Consumers can choose among sports, kids, lifestyle, news and info, pop culture and entertainment packs.
A number of other traditional pay TV providers are also looking to offer different kinds of “skinny” TV packages -- but not replacing any of their existing products. That is why Verizon is drawing the ire of Disney, NBC and Fox.
For example, Dish Network’s Sling TV is a cloud-based standalone TV service, which is offered in addition to Dish’s traditional TV package products.
From Verizon’s point of view: Consumers want it, and that is all that matters. TV advertising then should be a cinch to make big business.
But two of the big TV-media companies won’t be helping in this process. Will other media companies also say no to Verizon?