With 13 million subscribers, Dish is the No. 2 satellite provider in the U.S. Of that population, more than 2 million pay for HBO. Cinemax is also affected by the outage.
Dish, which is known for its bare-knuckled approach to carriage deals, opened both barrels on HBO in a press release after the midnight contract expiration. The company insisted that the premium network had made “untenable demands designed specifically to harm customers, particularly those in rural areas, as well as damage competing pay-TV providers.”
The operator pointed to HBO parent AT&T’s acquisition of Time Warner (creating WarnerMedia) as the issue. “Plain and simple, the merger created for AT&T immense power over consumers,” said Andy LeCuyer, DISH senior vice president of programming. “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.”
HBO countered in a statement that Dish has been “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.” The statement went on to urge subscribers to find “other ways” to get HBO, one of which is the $15-a-month HBO Now service, which does not require a pay-TV subscription.
HBO first went on the air in 1972, years before ad-supported cable pioneers like ESPN and CNN, creating a new paradigm for viewers paying for premium television service. Dish launched its satellite service in 1980.
In its release, Dish noted the changes in the marketplace since 2015, when the parties signed their last carriage deal. That was the year that HBO launched direct-to-consumer OTT service HBO Now. WarnerMedia has recently said HBO will be the foundation of a new direct-to-consumer service launching in 2019. HBO has long maintained that HBO Now has not cannibalized the core business or disrupted its traditional carriage relationships. Dish has also responded to the changing environment by launching Sling, an internet-delivered skinny-bundle package with rates starting at $25 a month.
“Usually when there is a programming dispute, we don’t see eye to eye on rates; but HBO has already set the going rate, so now they’re seeking to extract money a different way,” LeCuyer 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,” said LeCuyer. “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.”
A federal judge in June ruled against the Department of Justice in its lawsuit seeking to block the $81 billion merger of AT&T and Time Warner, which it claimed would be anti-competitive and anti-consumer. The DOJ has appealed the decision and a federal appeals court is scheduled to hear oral arguments of the appeal in December.