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Bloomberg
College football won’t go dark on New Year’s Day. Millions of TV customers from Boston to Washington were spared the loss of channels such as ESPN — and popular college football games — after Verizon Communications Inc and Walt Disney Co struck a distribution agreement on the eve of the New Year.
The companies reached a broad-based, multiyear agreement, with details to be released in coming days, Verizon spokeswoman Adria Tomaszewski said.
The agreement, if finalised, shows that pay-TV operators are still willing to pay for pricey sports channels even in an age of video streaming and declining viewership. Disney was able to win price increases for its programming and the pickup of a new channel, the ACC Network, according to a person familiar with the talks who asked not to be identified.
The negotiations were seen as a litmus test of the business model that’s fuelled Disney’s profit for years: charging ever-higher fees for ESPN even though many consumers don’t watch sports, and using the network’s popularity to force pay-TV providers to carry other programming.
THE DISPUTE
A contract between Verizon, which serves some 4.6 million customers under the Fios brand, and Disney, a major TV network owner, was set to expire on December 31. Disney had run ads on its channels warning viewers — including ABC audiences in New York and Philadelphia — that they might lose access and should contact Verizon to complain.
Verizon had countered in a statement that Disney was seeking hundreds of millions of dollars more for programming even though the company’s channels are losing viewers. Disney was also asking Verizon to pay for the ACC Network sports channel, due to start service in August. That network will carry events from the 15-member Atlantic Coast Conference, which doesn’t include any schools from New York City, Philadelphia or Washington.
At risk in the dispute were five college football games on New Year’s Day set to air on Disney-owned networks, including the Rose Bowl on ESPN. Also in jeopardy was ABC’s long-running “Dick Clark’s New Year’s Rockin’ Eve,†hosted by Ryan Seacrest.
PAY-TV PRESSURES
Such fee disputes have become more common as the arrival of new viewing options like Netflix Inc and a drop in pay-TV subscriptions have increased pressure on all of the parties to obtain the best possible deal.
The number of pay-TV subscribers who get ESPN fell 2.3 percent to 86 million in 2017.