AT&T—owner of HBO and DirecTV—lets HBO go dark on Dish in money fight
A first for HBO —
HBO’s first-ever blackout on a TV service comes five months after AT&T merger.
– Nov 1, 2018 5:06 pm UTC
HBOAT&T-owned HBO and Cinemax have been pulled from Dish’s satellite TV service and the Dish-owned Sling TV streaming service over a money dispute, marking the first-ever blackout for HBO in its 46-year history.
In June, US District Court Judge Richard Leon allowed AT&T to complete its purchase of Time Warner Inc., the owner of HBO and Cinemax, saying there was no reason to believe that AT&T would use its market power to harm rival TV providers or consumers. AT&T is also the owner of DirecTV, Dish’s primary competitor in the satellite TV business.
Dish said AT&T pulled HBO from Dish and Sling TV, while HBO said that Dish pulled the channel from its services as a negotiating tactic. Dish said that its customers will get bill credits for the time they cannot access HBO or Cinemax.
Dish blames AT&T/Time Warner merger
Dish today said the blackout proves that AT&T’s ownership of HBO is bad for consumers and rival TV providers.
“AT&T has made the unprecedented move to pull HBO and Cinemax content from Dish and Sling TV subscribers, after making untenable demands designed specifically to harm customers, particularly those in rural areas, as well as damage competing pay-TV providers,” Dish wrote.
HBO disputed that characterization, telling Ars that Dish took its signal down even though Dish could have continued to carry HBO under the previous terms negotiated before AT&T bought HBO. HBO also said that Dish has a history of blackouts, including with Fox News, CBS, Sinclair Broadcast Group, Tribune Media Company, and an ongoing blackout of Univision.
Dish senior VP of programming Andy LeCuyer released this statement:
Plain and simple, the merger created for AT&T immense power over consumers. It seems AT&T is implementing a new strategy to shut off its recently acquired content from other distributors. This may be the first of many HBO blackouts for consumers across the country. AT&T no longer has incentive to come to an agreement on behalf of consumer choice; instead, it’s been given the power to grab more money or steal away customers.
Dish said that “AT&T is demanding Dish pay for a guaranteed number of subscribers, regardless of how many consumers actually want to subscribe to HBO.” Dish said it is willing to enter binding arbitration with HBO.
HBO says it offered a good deal
HBO said it offered Dish more favorable terms than Dish had in the previous contract. Dish’s statement hints that it is seeking a price reduction, saying that “the market for HBO has changed since Dish last signed a carriage deal in 2015,” because “HBO set the market price at $15 per month with its launch of the direct-to-consumer HBO Now service.”
HBO urged viewers to “take advantage of the other ways to access an HBO subscription.” That would mean switching to another pay-TV operator such as DirecTV, purchasing an HBO Now online streaming subscription, or buying an AT&T mobile subscription that comes with HBO.
HBO provided this statement to Ars:
During our forty-plus years of operation, HBO has always been able to reach agreement with our valued distributors and our services have never been taken down or made unavailable to subscribers due to an inability to conclude a deal. Unfortunately, Dish is making it extremely difficult, responding to our good faith attempts with unreasonable terms. Past behavior shows that removing services from their customers is becoming all too common a negotiating tactic for them. We hope the situation with Dish changes soon but, in the meantime, our valued customers should take advantage of the other ways to access an HBO subscription so they can continue to enjoy our acclaimed programming.
HBO’s “Keep My HBO” site tells viewers that “Dish has dropped your HBO & Cinemax” and directs them to alternative providers.
The Trump administration’s Department of Justice last year sued AT&T to block its purchase of Time Warner, arguing that AT&T “would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner’s networks,” and raise prices for American consumers.
AT&T told the court that buying Time Warner would allow it to lower TV prices—but AT&T raised the base price of its DirecTV Now streaming service by $5 per month shortly after completing the merger.
The Trump administration is appealing its court loss, which could theoretically force AT&T and Time Warner to reverse the merger.
Consumer advocacy group Public Knowledge said the HBO blackout on Dish illustrates the problems with the merger and media consolidation in general. “In opposing the AT&T/Time Warner deal, opponents—including the Department of Justice—predicted that the newly combined company would have the incentive to withhold content, and would gain stronger leverage in negotiations like this one,” Public Knowledge Senior Counsel John Bergmayer said. “That is because AT&T stands to benefit if customers, frustrated by missing their favorite HBO shows, leave Dish to switch to DirecTV. Time Warner, as an independent company, did not have the incentive to hold out on HBO content in these situations before the merger.”
Dish today complained that AT&T’s court victory allowed the merger to be completed without any conditions that might have forced AT&T to “play fair… for HBO and Cinemax subscribers, regardless of their pay-TV provider.”
Dish noted that its customer base is primarily in rural areas with limited broadband access. AT&T is being “anticompetitive” by “intentionally punishing those who don’t have big-city broadband access, in an attempt to push customers to the only other satellite provider, its own DirecTV,” Dish said.
“AT&T is stacking the deck with free-for-life offerings to wireless customers and slashed prices on streaming services, effectively trying to force Dish to subsidize HBO on AT&T’s platforms,” LeCuyer also said. “This is the exact anticompetitive behavior that critics of the AT&T-Time Warner merger warned us about. Every pay-TV company should be concerned.”
HBO denied that the dispute is related to the merger, telling Ars that “Dish could have extended the deal with terms negotiated with HBO long before any merger talk with AT&T. This doesn’t have anything to do with the merger/trial.”