When AT&T announced plans to acquire HBO’s parent company Time Warner, competitors, consumer groups, and the Department of Justice argued that the combined company would harm competition. Now those critics say their concerns are being validated.
HBO and Cinemax went dark on pay television provider Dish’s satellite and video streaming customers after Dish and HBO failed to reach a deal to replace a contract that expired at midnight on Wednesday night. It’s the first time in HBO’s history that its channels have been “blacked out” as the result of a failure to reach a deal with a television provider.
Dish and HBO offered conflicting accounts of the dispute. Dish said in a statement that AT&T wants it to “pay for a guaranteed number of subscribers, regardless of how many consumers actually want to subscribe to HBO.”
But HBO president Simon Sutton tells WIRED that Dish already had a similar deal to pay for a set number of subscribers, and that such deals are common in the industry. “We had proposed various changes to that going forward,” Sutton says. “We offered them lower rates, a deal that would have allowed them to pay substantially less.”
Both companies say they gave the other party the option to extend the expiring contract while negotiating a new contract. Dish claims to have offered to continue under the old contract, then settle the difference between the old and new contracts once a new agreement had been made, an offer the company claims HBO refused. Sutton says HBO offered to simply continue the old contract until a new one was finalized and that Dish declined.
Pricing disputes between content providers and distributors are common, and Dish has at times blacked out other channels—including the Spanish language network Univision, which is currently dark. What makes the conflict between HBO and Dish particularly controversial is that in addition to HBO, AT&T owns rival satellite service DirecTV and rival streaming service DirecTV Now.
When the DOJ unsuccessfully sued to block AT&T’s purchase of Time Warner last year, it warned that AT&T could use its role as a pay TV provider with national reach to pressure other providers into paying more for Time Warner programming. If a cable or satellite provider such as Dish couldn’t carry HBO, the department argued, customers could turn to DirecTV instead.
The DOJ, which is appealing a federal judge’s decision to allow the merger, says that’s what’s happening now. “This behavior, unfortunately, is consistent with what the Department of Justice predicted would result from the merger,” a DOJ spokesperson said in a statement. “We are hopeful the Court of Appeals will correct the errors of the District Court.”
The consumer group Public Knowledge agrees. “This is another reason the DC Court of Appeals should reverse the decision allowing the merger,” the organization’s senior council, John Bergmayer, said in a statement.
Sutton denies that AT&T had any influence over the negotiations with Dish, and says Dish didn’t seem interested in reaching a deal. “I think they had decided to go dark with us a long time ago,” Sutton says.
In other words, Dish’s decision to black out the channels could be a publicity stunt calculated to make AT&T look bad ahead of DOJ’s appeal.
Nonetheless, HBO has already responded to the blackout with a website suggesting other ways Dish subscribers can access HBO, including DirecTV.