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ESPN, Verizon Settle Skinny Bundle Lawsuit

Verizon already backtracked from the pay-TV option that would have made it easier to only get sports channels

Disney’s ESPN and telecom giant Verizon said Tuesday they settled their lawsuit over the latter’s “skinny bundle” offer, which let customers of its Fios pay-TV service subscribe to ESPN networks as part of a cheaper package.

The case highlights how much technology has changed television in just a single year — and how the traditional models of distributing TV are entrenched even as the digital landscape shifts around them.

A year ago, Verizon introduced a cable package that sifted out channels like ESPN and put them into smaller, genre groupings like sports and children’s programming. But Disney complained that Verizon made the decision unilaterally, violating their contract.

Tuesday, the companies said they settled the suit with few further details. They said terms of the settlement were confidential, and both companies praised the other as a good partner.

Although they didn’t directly address whether Verizon could include ESPN in a skinny bundle, the telecom giant said in February it would be adjusting its packages to comply with programming contracts.

Fox Sports and NBCUniversal had also said Verizon’s “Custom TV” packages violated its contracts. The plan allowed customers the option of adding two channel bundles out of seven total, on top of a 35-channel basic cable lineup. A skinny sports bundle was among the choices.

But skinny bundles are no longer novel. When Verizon initially announced the bundles that spurred the suit a year ago, rival Dish had launched its skinny-bundle Internet TV service Sling TV only two months earlier.

And Disney a few months later prompted a wide sell-off in television company stocks when it disclosed that subscribers were dropping. CEO Bob Iger’s comments about modest subscriber losses in August stoked investor fears about “cord cutting,” the practice of forsaking a pricey pay-TV package for online alternatives.

Since then, Iger has credited online services like Dish’s Sling TV for contributing to subsequent increases in subscribers.