Twenty-First Century Fox will not join the Walt Disney Company and its ESPN division in suing Verizon (NYSE: VZ) over its skinny FiOS video bundles.
According to Deadline Hollywood, at the annual Milken Institute Global Conference on Tuesday Fox Chairman and CEO Peter Rice said, during an earnings call, "I'm not going to talk about ESPN's lawsuit. I think we'll work with Verizon; we'll look at what they're doing, we'll see how it evolves."
Earlier this week, ESPN filed suit against Verizon, alleging that its new Custom TV bundling product violates the terms of the programmer's licensing agreement with the pay-TV operator.
Verizon began offering Custom TV to FiOS video subscribers on April 17. For $55 a month, subscribers get a bundle of 35 basic cable and broadcast channels, but they can choose to add on separate "Channel Packs" themed around topics such as "sports" and "news." This is a problem for programmers like ESPN, which need broad reach to support their advertising-heavy business models and can't afford to have too many pay-TV subscribers opt out of having the channel on their set-tops.
"We've been trying to offer our distributors some flexibility," Rice said. "On the margins, we think some of the skinny bundles don't necessarily offer a good value. I think consumers will ask, 'Do I want to pay $75 for 20 channels (under a smaller bundle plan) or do I want to pay $80 for a 100 channels?'"
He added: "For the past five years we've really been trying to focus on five brands: Fox, Fox Sports, National Geographic, FX and Fox News. We think each one of those brands has really compelling content and will be in all the different bundles."
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