AT&T and DISH Network have now officially commenced a war of words over third-party access to HBO following a blackout that’s now affecting DISH and Sling TV customers. The reduction of service officially started at midnight on Friday and is currently still in effect, with no particular understanding of when it will end, or if it will end. As both companies are now blaming each other for the blackout with both stating the demands of the other were too much and this is turn led to a breakdown in negotiations over a new deal. With no deal in place, the blackout commenced.
Background: HBO is offered by a variety of different providers and operators and usually as a premium add-on to an existing package. A situation which had previously provided an independent stance to the provision of the service and therefore no blackouts like this had previously occurred. However, AT&T picked up the ownership of HBO as part of its wider Time Warner acquisition, which now operates under the newly-formed WarnerMedia entity. With AT&T also acting as a provider of content through its various services including DIRECTV, DIRECTV NOW, and Watch TV, this means HBO is now technically in the hands of a competing service to DISH and Sling TV, among others.
This was in fact one of the issues facing a merger of this kind and why the U.S. Department of Justice announced it was appealing the approved merger citing that the existence of a content distributor like this, who also is the license holder would result in an uneven playing field. One which could in theory lead to an increase in customer costs associated with HBO either by increased costs to third-party services which are then passed onto consumers, or by pricing those third-party entities out of the market altogether which in turn would likely result in a reduction in access outside of the content distributor who is also the license holder. Which is exactly what DISH is now stating has happened and the cause behind the current blackout, with the company issuing a press release stating AT&T has made “untenable demands designed specifically to harm customers.” The wording from DISH is even more blatant in some areas where it actively accuses AT&T of anti-competitive practises by stating AT&T’s goal here is “to force DISH to pay for customers who do not get HBO, in turn funding AT&T to give away HBO free-for-life to its own customers.”
What DISH explains in more detail is that AT&T is apparently asking DISH to not pay for the number of users who subscribe to HBO through its respective services, but to pay for an undisclosed number of subscribers regardless. The suggestion being that arbitrary number is far greater than the current number of actual users. DISH therefore argues AT&T is specifically asking for this greater payment as a means to offset against the cost to itself of offering HBO to its own wireless customers for free. In no uncertain terms, DISH accuses AT&T of “stacking the deck” in a way that benefits no one other than AT&T.
In response, comments ascribed to HBO President and Chief Revenue Officer, Simon Sutton, place the fault of the blackout firmly at the feet of DISH. With Sutton quoted by Reuters as saying “Dish’s proposals and actions made it clear they never intended to seriously negotiate an agreement.” Other comments in the same report look to confirm that WarnerMedia has tried to extend the contract in lieu of continued negotiations but DISH reportedly declined. In a similar escalation of the rhetoric exhibited by DISH, AT&T has also chimed in and been quoted suggesting DISH and the Department of Justice are in cahoots to block the merger. With another WarnerMedia spokesperson taking this suggestion further by outright accusing DISH of a “tactical decision” to suspend HBO negotiation as a means to kickstart the blackout. An aspect the spokesperson offers as proof of the continued “collaboration” between the Department of Justice and DISH.
Impact: Regardless of where the blame lies, it’s the customers who are suffering the most here as it would seem this blackout is now affecting more than two million subscribers across the DISH and Sling TV ecosystems. As it is not only HBO access that has been stopped, but also Cinemax. What’s likely to be more troubling is that the words used by both parties seem to suggest neither is particular willing to concede much as a means to reduce the impact on customers in the foreseeable future - customers who in reality are not only DISH and Sling TV customers, but also AT&T customers by virtue of a subscription to HBO in the first place. While it remains unclear how long this is likely to remain an active issue, DISH's press release does state affected customers will not be charged during the blackout period as the company will credit bills to reflect the absence of HBO (and Cinemax). In addition, DISH is also offering those customers a “free preview” of HDNET Movies. Although there were no details provided on what constitutes a free preview, or how long that preview will last.
Consumers aside, this in theory could prove to be more of an issue for AT&T than for DISH as the former has a date with the Department of Justice in early December where the two are expected to make their oral arguments in front of the United States Court of Appeals. It’s highly likely the Department of Justice will draw on this current blackout as a real-world example of the implications of a merger of this magnitude. While the various quoted comments from AT&T and WarnerMedia representatives in the last twenty-four hours strongly indicate AT&T will further refer to the blackout as not an issue with the merger, but a result of the alleged collaboration between the Department of Justice and DISH.
It’s worth affected customers keeping in mind that during the blackout period they do have the option to subscribe to HBO NOW as a means to access HBO content. HBO NOW is the standalone version of the service where customers can gain access on a no-contract basis for $14.99 per month. Although those customers will need to make use of a web or app-based device to utilize HBO NOW.