By Scott Moritz and Gerry Smith | Bloomberg News
AT&T Inc.’s HBO and Cinemax programs were pulled from Dish Network’s satellite-TV service after the two companies failed to reach a new distribution agreement.
It is the first time in HBO’s 40-year history that programming has been blocked at a distribution partner over a contract dispute, according to AT&T, which acquired the premium network as part of its June $85 billion acquisition of Time Warner.
Dish opposed the Time Warner deal and had concerns about excess leverage in programming discussions — a risk that the U.S. Justice Department warned about when it tried to stop the takeover.
The satellite-TV provider said the channels went dark at midnight Wednesday for its customers and subscribers of its Sling TV online service. The dispute is over demands by AT&T’s WarnerMedia that Dish pay for a guaranteed number of subscribers, regardless of how many consumers actually subscribe to HBO, Dish said. About 2.5 million of Dish’s 13 million customers subscribe to HBO.
Dish made the move as the Justice Department is trying to appeal a federal court ruling that allowed AT&T, the largest TV service provider, to purchase Time Warner — which was renamed WarnerMedia after the deal.
While seeking takeover approval, AT&T had offered to not pull content as part of contract negotiations, though that applied only to Turner shows and not HBO. In its lawsuit to block the AT&T takeover of Time Warner, the Justice Department dismissed the proposal as a flawed remedy that has no oversight and expires after seven years.
The satellite-TV broadcaster has been particularly aggressive lately in negotiations with programmers. Because of a contract dispute, Spanish-language network Univision has not been carried on Dish for several months, costing both companies millions of dollars in subscriber fees.
“It seems to be their practice to do this to almost everybody,” Simon Sutton, HBO’s chief revenue officer, said of Dish in an interview Thursday. “We did offer them an extension on the current deal terms and they rejected that. We have made them proposals with better terms than the current deal and they have not agreed to any of those. This has nothing to do with AT&T. This is purely a dispute on carriage terms.”
Dish says the blackout is a sign that media consolidation will put more pricing pressure on TV distributors.
“Plain and simple, the merger created for AT&T immense power over consumers,” Andy LeCuyer, Dish’s senior vice president of programming, said in a statement.
Dish said it would like to bring in arbitration to settle the differences and that HBO customers will not be billed during the blackout.
Sutton said Dish subscribers can get HBO online through HBO Now and via Amazon, Hulu and other TV providers. But, he added, the blackout on Dish “will be vexing to us. We’d much rather have kept the Dish subscribers.”
