Verizon Ushers in the Era of ‘Skinny Cable’

For years, there’s been hand-wringing over the changes Netflix, YouTube, and Amazon.com might force on the pay-TV industry, as the upstarts eschew bloated 500-channel offerings in favor of cheaper, slimmer packages of programs that consumers actually want to watch. But now the cable and satellite industry is facing a more immediate—and potentially more damaging—challenge from one of its own, aimed squarely at a financial linchpin of the business: the programming bundle.

Verizon Communications’ FiOS service, the No. 6 U.S. pay-TV operator, in late April began selling Custom TV, a $55-a-month package of 45 base channels, plus a customer’s choice of two small collections of entertainment, news, sports, or kids’ offerings. Other tiers can be added for $10 each. But the big difference is that no sports networks are mandatory in the core bundle. Instead, much to the dismay of cable sports programmers Walt Disney, 21st Century Fox, and NBCUniversal, Custom TV puts sports into one of the tiers that people can choose not to buy.