HBO, Cinemax Go Dark to Dish Customers

AT&T’s Home Box Office and Cinemax premium channels went dark to Dish Network subscribers Thursday after the parties failed to reach a distribution agreement, the first time the networks have ever gone dark to a distributor in their more than 40-year history.

Dish has about 13 million satellite TV customers, with around 2.5 million of those subscribing to HBO, according to reports.

In a statement, HBO said Dish had made negotiations “extremely difficult,” and responded to its attempts to negotiate with “unreasonable terms.”

“Past behavior shows that removing services from their customers is becoming all too common a negotiating tactic for them,” HBO said in its statement. “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 said.

Dish customers have endured several blackouts over the years, but they have mainly come at the hands of broadcasters over retransmission consent disputes. For example, it is currently entering the fourth month of a blackout with Spanish language broadcaster Univision. While Dish has had its fair share of scuffles with programmers as well, the HBO fight is different because the premium channel is a la carte – only those customers that want it get it and the revenue split with distributors is usually quite robust.

Dish was a vocal opponent of AT&T’s merger with Time Warner Inc., which brought HBO and several other networks under the telco umbrella. In a statement, Dish said that may have colored AT&T’s negotiations with the satellite giant, adding that despite the Department of Justice’s attempt to block the deal – the agency is appealing – there were on guidelines put in place to ensure the programmer “played fair” with distributors.

Andy LeCuyer

Andy LeCuyer

“Plain and simple, the merger created for AT&T immense power over consumers,” Dish senior VP of programming Andy LeCuyer said in a statement. “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.”

While Dish customers that want to access the premium channels can do so through the OTT service HBO Now, Dish argued that many of its rural subscribers don’t have sufficient broadband access to do so.

“AT&T’s actions are a deliberate slap in the face to rural Americans,” LeCuyer continued in his statement. “And furthermore, they are anticompetitive. AT&T, a company worth more than $200 billion, is 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 the dispute centers around HBO’s demand that it pay for a guaranteed number of subscribers, regardless of how many actually sign up for service.

“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 continued. “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.”

Dish has suggested the dispute can be settled through binding baseball-style arbitration.

Rather than trying to force consumers onto their platforms, we suggest that AT&T try to achieve its financial goals through simple economics: if consumers want your product, they’ll pay for it. We hope AT&T will reconsider its demands and help us reach a swift, fair resolution,” added LeCuyer in his statement.

Dish and eligible Sling TV customers will be credited on their bill for time they do not receive HBO or Cinemax. Dish is also offering customers a free preview of HDNET Movies which offers movies uncut and commercial free.