Terry Denson, Verizon’s lead programming negotiator, told the Wall Street Journal that a more logical usage-based approach may eventually come to Verizon’s FiOS TV.
FiOS, he said, is in talks with mid-size and smaller content companies to pay for channels based only on how long a viewer watches. The charges would kick in after about 5 minutes of viewing of a program.
Verizon’s plan is still in the discussion stages, although it could be a win-win strategy that both lowers Verizon’s overhead while lowering costs for many of its subscribers. Content providers or heavy TV viewers may feel otherwise.
“This is a conceptual approach and we are making providers aware of it as we meet with them in the course of business,” a Verizon spokesperson told Mashable after the Wall Street Journal interview. Verizon is focusing on small and mid-level media companies first, before approaching larger ones.
Verizon, trying to control its content costs, is broaching what many consider a radical idea among television executives. Media companies have long bundled the channels they sell to pay TV distributors. That way, if a distributor wants to carry a certain channel, it needs to carry the entire bundle offered, often including channels that aren’t very popular.
In addition to ending that bundling model, Verizon also wants the data it uses to determine viewership to come from its own STBs as opposed to the Nielsen ratings boxes.
Verizon is the sixth-largest pay TV provider in the country with 4.7 million subscribers.
In the meantime, Cablevision last month filed a federal antitrust suit against Viacom over the content distributor’s programming bundling practices, which are alleged as anticompetitive. The lawsuit targets Viacom’s insistence that ancillary networks be included in programming agreements in order to gain distribution rights to more popular networks such as Nickelodeon, MTV and Comedy Central.
Cablevision is arguing abuse of power in the lawsuit, which if successful, could have rippling effects throughout the pay TV industry.