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HBO channels, now controlled by AT&T, are yanked off Dish Network

 (Paul Sakuma / AP)
(Paul Sakuma / AP)
By Meg James Los Angeles Times

Dish Network customers, including those who subscribe to SlingTV, have lost access to HBO channels and Cinemax – months after AT&T gained control of HBO’s parent company – in the television industry’s latest escalation of hardball negotiations over carriage fees.

The dispute marks the first-ever blackout of HBO channels. HBO, which includes such programs as “Game of Thrones,” “Silicon Valley” and “Last Week Tonight with John Oliver,” has long maintained amicable relations with its distribution partners because it relies on them to help market its channels, including Cinemax.

The channels were pulled early Thursday when the carriage contract expired. The blackout affects about 2.5 million of Dish’s 13 million customers, according to a person close to the situation who was not authorized to publicly discuss internal numbers.

Dish Network, based in Englewood, Colorado, blamed the blackout on AT&T’s takeover of HBO and other Time Warner properties, which was completed in June. HBO, meanwhile, accused Dish of offering unreasonable proposals, saying that has become a “negotiating tactic” for the satellite TV provider.

AT&T’s acquisition of Time Warner properties “has allowed the giant conglomerate to relentlessly exert power and influence over competing pay TV providers,” Dish said in a statement.

That $85 billion merger transformed the Dallas-based phone company into one of the world’s largest entertainment firms, with huge clout in the marketplace. AT&T also owns DirecTV, which is Dish’s largest competitor.

DirecTV and Dish both have been struggling to hold on to customers.

“Plain and simple, the merger created for AT&T immense power over consumers,” Andrew LeCuyer, Dish’s senior vice president of programming, said in a statement. “It seems AT&T is implementing a new strategy to shut off its recently acquired content from other distributors.. AT&T no longer has incentive to come to an agreement . instead, it’s been given the power to grab more money or steal away customers.”

The U.S. Justice Department tried to block the AT&T-Time Warner merger – a deal President Donald Trump also opposed. During a trial, Dish executives testified against AT&T, saying the merger would be anticompetitive. Time Warner, which AT&T renamed WarnerMedia, also owns CNN, which is one of Trump’s most severe critics. But in June, a federal judge in Washington ruled in AT&T’s favor, allowing the merger to proceed.

Two months later, the Justice Department appealed the ruling. The blackout on Dish systems could give the government ammunition in its case against AT&T.

Dish accused AT&T of trying to weaken competition as it prepares to roll out a WarnerMedia streaming service, which includes HBO, early next year. HBO also has a standalone streaming service, HBO Now. Dish also said AT&T is demanding that Dish pay for a guaranteed number of subscribers “regardless of how many consumers actually want to subscribe to HBO.”

HBO lamented the situation and pointed to Dish, saying the satellite company increasingly uses blackouts as a negotiation tactic. Dish does have the highest percentage of blackouts among major pay-TV providers.

“During our 40-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,” HBO said in a statement. “Unfortunately, Dish is making it extremely difficult, responding to our good-faith attempts with unreasonable terms.”

Another change that came with the merger: AT&T senior executive John Stankey – who previously ran DirecTV – now is in charge of HBO and other WarnerMedia assets. Stankey is a veteran of the carriage-fee wars. According to HBO, Stankey was not involved in the negotiations with Dish; rather, they have been handled by HBO executives.

Programmers have long grumbled about DirecTV’s fierce negotiating style. Programmers also complain that Dish often drags its feet in negotiations to gain leverage. Channels owned by Spanish-language TV broadcaster Univision have been off Dish’s system since June 30, and that dispute has no end in sight.

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