In what could be a sign of things to come — as well as a microcosm of the rapidly consolidating media landscape — HBO went dark Thursday for millions of Dish Network subscribers, as well as subscribers to Dish’s streaming service, Sling TV, due to a contract dispute. While blackouts aren’t uncommon during difficult negotiations between TV producers and distributors, the conversation surrounding this particular feud suggests that it could be the first volley in a bigger battle between two very different satellite providers.
The blackout occurred as HBO and parent company AT&T (which acquired the premium cable network as part of its controversial acquisition of Time Warner) were in the process of negotiating a renewal of Dish’s HBO contract. Those talks apparently reached an impasse, and HBO went dark on Dish and its streaming service Sling TV just after midnight when the contract expired.
Shots fired
The Dish blackout was the first distribution-related blackout for HBO programming in the company’s history, dating back 45 years.
In a press release addressing the blackout, Dish indicated (in no uncertain terms) that the AT&T and Time Warner merger led to this scenario — and will likely lead to future blackouts — as the multimedia mega-giant attempts to push customers to its own competing satellite television service, DirecTV, along with its streaming service, DirecTV Now. (AT&T acquired DirecTV in a similarly controversial, $48.5 billion merger in 2015.)
“Plain and simple, the merger created for AT&T immense power over consumers,” said Andy LeCuyer, Dish senior vice president of programming, in a statement regarding the blackout. “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.”
Along with the services offered by Dish competitor DirecTV, AT&T also offers HBO for free with certain tiers of its mobile plans — including a deal that gives subscribers of a now-retired plan free HBO for life. Another offering, stand-alone streaming service HBO Now, doesn’t require a traditional pay-TV cable or satellite subscription.
The inability to reach a deal on a contract renewal with Dish has raised suspicions that AT&T is willing to risk Dish’s 2 million HBO subscribers in order to give its DirecTV properties a competitive edge — something that consumer advocates have long argued is one of the dangers of a monopoly that consolidates production and distribution of content under a single roof.
This was the crux of a Department of Justice lawsuit that aimed to prevent the merger, arguing that it gave AT&T the ability to make its grab bag of TV and movie properties (which includes everything from HBO to Warner Bros. TV and movie studios) too expensive for competing satellite and streaming TV services. A federal judge ruled against the Department of Justice in June, and now a federal appeals court is scheduled to hear arguments on that appeal in December.
He said, she said
For its part, AT&T argues in a statement that it was Dish Network’s well-documented hardball approach to negotiation that led to the blackout. The statement concluded by encouraging fans of HBO’s programming to seek out “other ways” (such as HBO Now) to tune in.
“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,” read the statement from HBO. “Unfortunately, Dish is 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. 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.”
Given that HBO Now could also be considered a rival to other streaming TV services — like Dish’s own Sling TV — that package bundles of standard and premium cable channels, the statement from HBO doesn’t exactly diminish the specter of monopoly concerns looming over the contract dispute.
At a time when nearly every studio is developing its own way of delivering movie and television projects to consumers without the need for a traditional satellite or cable television company, the relationship between producers, distributors, and consumers has never been more in flux.
The future of how consumers get access to their favorite shows and movies from a wide variety of sources could very well be determined by the way disputes like this are settled (if at all). As the competition for eyes gets dirtier, could high-profile blackouts like this become a common occurrence?
We’ll have to wait and see how things unfold, but for now, while correlation certainly doesn’t always imply causation, AT&T seems to have fewer and fewer reasons to play fair. And while that might be great for AT&T customers and shareholders, as Dish network subscribers can attest, it could be very bad for everyone else.
