Verizon's Shammo: We believe our 'existing contracts' allow skinny bundles

Verizon (NYSE: VZ) says it doesn't need the permission of programmers to implement its new "Custom HD" bundling strategy for its pay-TV service.

Fran Shammo, Verizon

Shammo (Source: Verizon)

"We believe we're able to offer these packages under our existing contracts," said Fran Shammo, executive VP and CFO of Verizon, when asked during Tuesday's first-quarter earnings call whether his company had discussed the strategy with programmers prior to deploying it.

"This is the product the consumer wants," Shammo said. "It's all about consumer choice. Most people only watch about 17 channels."

On Sunday, Verizon introduced a new channel bundling plan, Custom HD, which allows its FiOS pay-TV customers more choice in terms of paying for channels they want and vice-versa. Under the new plan, FiOS customers get a base package of about 45 broadcast and cable channels, and can choose add-on "Channel Packs" of 10-17 networks, themed around "sports," "kids," "lifestyle," etc.

Programmers including The Walt Disney Company have already pushed back, claiming the strategy is, in fact, "not authorized" under Verizon's existing licensing deal.

For the quarter, Verizon added about 90,000 FiOS video subscribers and 133,000 broadband customers, as the company posted better-than-expected Q1 earnings of $4.34 billion. For a comprehensive look at Verizon's Q1 earnings picture, read this FierceWireless story.

Although a number of content deals have been announced for its new wireless-based over-the-top service, Shammo continued to resist offering greater detail about it.

"This is all about having the consumer consume more content on their handset on the Verizon wireless network," he said, adding that the service could deploy such technologies a LTE multicast and might implement advertiser-supported business models. The product, he still maintained, will debut this summer.

Asked if Verizon's somewhat revolutionary FiOS bundling strategy had anything to do with setting up the new OTT service, Shammo added, "I would not read into the custom TV package being used as a precursor. It's not. These are two distinct ecosystems."

For more:
- visit this Verizon investor relations page

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