Why Is ESPN Suing Verizon?

ESPN --a subsidiary by Walt Disney Co (NYSE: DIS) -- on Monday announced it has sued Verizon Communications Inc. (NYSE: VZ) over what it claims to be a breach of contract stemming from Verizon's new custom cable plan.

Verizon is now allowing its FiOS customers to choose a smaller TV bundle, while ESPN argued that Verizon is "unfairly depriving" its customers of the "benefits of its bargain."

Verizon previously noted that its actions fall within its rights. On the other hand, ESPN argued Verizon's new offerings is a breach of existing agreements. During a conference call on Friday, Verizon's Chief Financial Officer Francis J. Shammo told analysts that "we believe that we are allowed to offer these packages under our existing contracts." When pressed for further details, specifically if Verizon had "explicit permission" from Disney, the executive merely answered "we'll leave it at that."

"ESPN is at the forefront of embracing innovative ways to deliver high-quality content and value to consumers on multiple platforms, but that must be done in compliance with our agreements. We simply ask that Verizon abide by the terms of our contracts," ESPN told CNBC in a statement on Monday.

ESPN is seeking an injunction and damages. As of early Monday afternoon, the filing wasn't available from the court.

Shares of Disney hit new 52-week highs on Monday, a move that is being attributed to two analysts who published bullish reports on the firm.

Shares of Verizon were trading higher by 0.26 percent early Monday afternoon.