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ESPN Sues Verizon Over Custom TV Bundles

Disney protested last week when Verizon offered FiOS subscribers slimmed-down packages

ESPN has filed a breach of contract notice against Verizon following the telecom giant’s decision last week to offer streamlined bundles at lower costs to subscribers.

The sports network says that Verizon’s Custom TV offering violates the cable provider’s obligations to ESPN under license agreements and carriage arrangements the two parties had established.

A summons and notice filed in New York and obtained by TheWrap seeks a declaratory judgment against Verizon for “unfairly depriving [ESPN] of the benefits of its bargain,” and asks for damages consistent with, but not limited to, what ESPN would have received under the original agreement. ESPN also seeks an injunction on Verizon’s Custom TV bundle.

Verizon said in a statement to TheWrap that its new bundles fall within the terms of the contract with ESPN.

“Consumers have spoken loud and clear that they want choice, and the industry should be focused on giving consumers what they want,” the statement reads. “We are well within our rights under our agreements to offer customers these choices.”

The Walt Disney Company, of which ESPN is a subsidiary, had joined Fox and NBC in protesting the new service, which offers a standard package plus several genre packs that can be added. Content providers rely on the strength of packages to command high carriage fees, and ESPN, at more than $5 per cable subscriber on average, had always been the core of every bundle.

Verizon’s new bundling recognizes the increasing reality that cord-cutter and cord-never audiences have a wealth of choice in how they view television content.

In a statement, ESPN said it welcomes that changing tide, but that contracts still need to be upheld.

“ESPN is at the forefront of embracing innovative ways to deliver high-quality content and value to consumers on multiple platforms, but that must be done in compliance with our agreements,” the network said. “We simply ask that Verizon abide by the terms of our contracts.”

Pamela Chelin contributed to this report.