ESPN sues Verizon over 'Custom HD' bundle

ESPN is suing Verizon (NYSE: VZ) over the pay-TV company's new network bundling product, "Custom HD." 

In a suit filed Monday in New York Supreme Court, the Disney-owned channel says it's seeking to stop Verizon from "unfairly depriving" it of "the benefits of its bargain."

"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. We simply ask that Verizon abide by the terms of our contracts," ESPN said in a statement.

Speaking to investors during Verizon's Q1 earnings call last week, Verizon CFO Fran Shammo said the company's existing contracts allow for execution of the new bundling plan, which was introduced April 18.

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

Custom HD provides Verizon FiOS with a collection of 35 basic cable and broadcast channels for $54.99, then lets customers choose two from a collection of seven add-on "Channel Packs" themed around "sports," "news," "pop culture," etc. 

The plan allows customers to disaggregate larger channels like ESPN from smaller siblings like Disney XD. Content suppliers including ESPN and Fox Sports 1 have complained that this is a violation of their program rights agreements with Verizon. 

For more:
- read this Washington Post story
- read this CNBC story

Related links:
Is Verizon's Custom HD an Ergen-esque strategy for negotiating OTT rights?
Verizon's Shammo: We believe our 'existing contracts' allow skinny bundles
Disney/ESPN says it didn't consent to Verizon plan to break up bundles

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