AT&T Nears Another Carriage Crossroads As Sinclair Issues Blackout Warning – Update

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UPDATED with AT&T response. AT&T, whose DirecTV satellite and U-verse cable systems experienced blackouts of stations owned by CBS and Nexstar over the summer, is facing another carriage crossroads with Sinclair Broadcast Group.

Sinclair, the No. 2 U.S. owner of local TV stations, issued a warning Friday that millions of viewers in 86 markets could lose access to 136 stations and Tennis Channel as a carriage deadline looms.

The current carriage agreement expired in August, but the parties agreed to a five-week extension. The new deadline is next Friday, September 27.

AT&T has been coping with pressure from activist investor Elliott Management, which has identified its pay-TV operations and the 2015 acquisition of DirecTV as a significant flaw in the company’s operations. Speculation has been mounting on Wall Street that AT&T could seek to unload the satellite distributor, though the path to such a deal is complicated and would likely leave red ink in its wake given subscriber declines of late.

Hanging in the balance during the carriage standoff are NFL games, late-season and postseason Major League Baseball games as well as the early part of the fall broadcast season.

“AT&T is the largest MVPD in the country and seems intent on using its tremendous market power to dictate to viewers which programming from other content providers they can receive, even as they continue to acquire content providers and push their own content to viewers,” Sinclair SVP and General Counsel David Gibber said in a press release. “Despite the tremendous market power of AT&T, most consumers of AT&T and DirecTV do have some other alternatives to receive our in-demand programming. Although it would be unfortunate to lose AT&T and DirecTV as customers, we are simply not prepared to sell our programming to them at the below market rates they are demanding due to their overwhelming market power.”

In a lengthy response, AT&T thanked its customers for their patience while executives “work this matter out,” but the telecom and media giant blamed Sinclair for being “disingenuous” in its complaints about AT&T.

“Make no mistake. Sinclair alone controls whether or not its stations remain available on any provider’s lineup,” the company said. “And here, yet again, Sinclair has chosen to take its negotiations public, putting our customers into the middle so it can demand ever increasing and unjustified fees and enforce unwarranted limitations on our customers’ choices.”

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