Well, that didn't take long. Shortly after announcing Custom TV, a streamlined, customizable TV package that targets would-be cord cutters, Verizon was told that its current contract with ESPN doesn't allow it to offer the sports giant's channels as part of a separate, add-on package.

Announced last week, the Verizon FiOS Custom TV plan combines broadband with a TV service that offers a set number of basic channels—including local broadcast channels—and a choice of add-on programming packs. ESPN, Fox Sport,  and other channels are part of a sports-themed add-on pack.

Apparently, breaking ESPN off into a separate add-on package isn't allowed under the existing contract. In a statement obtained by re/code, an ESPN spokesperson said that as described, Verizon's approach would violate the companies' existing agreements. "Among other issues, our contracts clearly provide that neither ESPN nor ESPN2 may be distributed in a separate sports package.” ESPN says that its deal requires that it be carried in a company's base, most widely distributed cable package.

That's a major difference between Verizon's approach and Dish's recently launched Sling TV service, which includes ESPN as part of the base $20 monthly subscription.

We're waiting to hear back from Verizon, but one quick fix would be to move ESPN to Custom TV's basic programming tier and combine the other sports channels into a single sports add-on pack. However, it's not clear whether that would affect the price of the service, currently $65 a month with 25Mbps broadband. But it could certainly hamper Verizon's ability to offer skinnier TV packages that contain only those shows its customers want without paying for others they don't.

As more Internet TV services launch over the next several months, it will be interesting to see how existing contracts will affect their ability to provide lower-cost, more streamlined programming bundles.

—James K. Willcox

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