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Iger: Unbundling cable will raise consumer prices

Telecommunications and cable providers are trying to meet demand for greater flexibility beyond the traditional bundle of television and Internet service, but slimmer packages could end up raising costs for customers, Walt Disney CEO and Chairman Bob Iger said Tuesday.

Broadband costs will increase as providers unbundle service because many consumers are getting a deal on Internet service. As customers transition to so-called "skinny" packages, which offer fewer channels at a lower price, they will have to pay for broadband separately.

"That's going to be very expensive. I haven't seen a skinny package that in my opinion creates great value to consumers yet, but we'll see and we're open to discussion about it," Iger said on CNBC's "Squawk on the Street."

Iger said he does not believe the bundle as we know it is dead because it still offers "great value." However, he acknowledged that the world has entered an era of greater consumer choice in which customers demand more flexibility and customization.

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Disney's ESPN sued Verizon Communications last month, alleging breach of contract over a new pay TV offering. The sports network said Verizon violated its obligations "under certain license agreements" and it wants Verizon to pay.

The dispute involves Verizon's new pay TV plan, offering consumers a slimmer package of channels targeting genre-specific packages such as sports, kids or news. In traditional subscriptions, customers pay for a large group of networks that often include ESPN.

ESPN and other media companies with a lot of sports content say the package violates their contracts with Verizon.

Iger said he did not believe an era of litigation between programmers and developers was beginning. He characterized the Verizon lawsuit an isolated incident.

"We believe that they have violated our agreement and therefore we have taken legal action. We're certainly willing to work with various distributors to come up with packages that are of value to their consumers and also to continue to provide value for us," he said.

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A Verizon spokesman said the company is in compliance of existing agreements.

"Consumers have spoken loud and clear that they want choice, and the industry should be focused on what the consumer wants and giving them what they want," he said.

Twenty-First Century Fox and Comcast's NBC Universal also said last week that the new Verizon offering violated the terms of their contracts.

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