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AT&T Cuts Off DirecTV Competitor Dish from HBO and Cinemax; DoJ Claims Vindication

Phillip Dampier November 6, 2018 AT&T, Competition, Consumer News, Dish Network, Online Video, Sling 2 Comments

More than 2.5 million HBO and Cinemax customers are blacked out after AT&T cut off its biggest satellite rival Dish Networks and streaming provider Sling TV in a dispute the Department of Justice claims confirms its concerns that AT&T’s merger with Time Warner (Entertainment) would be bad for consumers.

It is the first time HBO has faced a contract renewal blackout on any platform in its 46-year history. But some groups feel it was predictable, considering AT&T owns DirecTV, Dish’s biggest rival. AT&T acquired HBO’s parent company, Time Warner (Entertainment) in 2018, changing its name to WarnerMedia. Last summer, Judge Richard J. Leon, senior district judge on the U.S. District Court for the District of Columbia gave AT&T approval of that $85 billion merger deal with no conditions, scoffing at Department of Justice claims that the merger would give AT&T undue market power that could be used to threaten competitors by depriving them access to popular cable networks and content or use of those networks in marketing materials to attract new subscribers.

As the DoJ pursues an appeal of Judge Leon’s decision, this week’s blackout seems to add ammunition to the government’s case against the merger.

“This behavior, unfortunately, is consistent with what the Department of Justice predicted would result from the merger,” a DoJ representative told Reuters. “We are hopeful the Court of Appeals will correct the errors of the District Court.”

A statement from Dish Networks harmoniously echoed the government’s position.

“Plain and simple, the merger created for AT&T immense power over consumers,” said Andy LeCuyer, senior vice president of programming at Dish, in a statement. “It seems AT&T is implementing a new strategy to shut off its recently acquired content from other distributors.”

Consumer groups like Public Knowledge also agree.

“In opposing the AT&T/Time Warner deal, opponents — including the Department of Justice — predicted that the newly combined company would have the incentive to withhold content, and would gain stronger leverage in negotiations like this one, ” said John Bergmayer, senior counsel at Public Knowledge. “AT&T stands to benefit if customers, frustrated by missing their favorite HBO shows, leave DISH to switch to DirecTV. Time Warner, as an independent company, did not have the incentive to hold out on HBO content in these situations before the merger. Now, consumers are the ones paying the price.”

Dish is accusing AT&T of demanding the satellite service pay for a guaranteed number of subscribers, regardless of how many consumers actually want to subscribe to HBO.

“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,” said LeCuyer. “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. 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.”

On its face, the nationwide blackout of HBO and Cinemax on America’s second largest satellite TV provider could be a public relations disaster for AT&T, depriving customers from accessing premium movie networks for the first time. But AT&T is fighting back in a coordinated media pushback.

In its defense, HBO is claiming Dish was not negotiating in good faith. Simon Sutton, HBO’s president and chief revenue officer: “Dish’s proposals and actions made it clear they never intended to seriously negotiate an agreement.”

“Past behavior shows that removing services from their customers is becoming all too common a negotiating tactic for them,” echoed AT&T.

“The Department of Justice collaborated closely with Dish in its unsuccessful lawsuit to block our merger,” a WarnerMedia spokesman said in a statement. “That collaboration continues to this day with Dish’s tactical decision to drop HBO – not the other way around. DoJ failed to prove its claims about HBO at trial and then abandoned them on appeal.”

As always, customers are caught in the middle. For now. AT&T and HBO are telling consumers to drop their Dish subscriptions and stream HBO and Cinemax online directly from their respective streaming platforms, or find another provider. Dish has told its satellite and Sling TV customers they 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.

Oral arguments for the DoJ’s appeal are scheduled to begin Dec. 6. Court documents revealed today the judges that will hear the appeal are: Judith W. Rogers, Robert L. Wilkins, and David B. Sentelle.

Currently there are 2 comments on this Article:

  1. LG says:

    And piracy will once again become an attractive option. These guys just don’t get it. What really needs to happen, is restricting ISP ownership from any other business. Hollywood->Cable/Sat.=Same Thing.. When people weren’t buying movie theater tickets any more (since they started costing ridiculous sums).. people started staying home and watching TV. The response? Lowering theater prices? LOL! No! Instead, they just bought up the cable TV companies, effectively chasing their fleeing customers. So, did they learn their lesson? Absolutely not. Once again, greed ruled the day. CATV prices soared. Now, people found another way.. two of them, really. One, piracy. Two, Netflix and the other streaming sites. Hollywood/CATV’s reaction? Buy up ISPs, restrict their competitors content and drive prices yet higher. It’s getting to the point that we need to take measures to separate Hollywood from CATV and ISPs. In the 50’s, if you told someone that 50 years from then, Hollywood would own and control not just movie theaters, but TV and phones.. they’d never believe it. Since email is largely a replacement for post, they own the post office too. This needs to change.

    • Post-in-the-Wilderness says:

      Excellent comment LG. The courts used to support antitrust issues in order to protect the citizens. They no longer see us as citizens they serve, but consumers whom businesses have the right of l unfettered manipulation.

      We need to institute a type of Glass-Steagall framework for the entertainment media along the lines you’ve mentioned.

      We’ve seen how repealing Glass-Stegall has allowed banks to abandon the high-paying interest on savings accounts.. We’ve seen how they’ve ceased being true community banks that loaned to local business owners. They’ve become pseudo-banking mega-financial entities. They now make their profits by playing the market, buying up the competition, and investing in politicians and overseas ventures instead of mom-and-pop shops. Truth be told, they have complete disdain for us because we’re just little fish in their eyes.

      This is exactly what happened when the courts rubber-stamped the TD Ameritrade takeover of Scottrade last year. They were warned how the citizens would be shafted by the move. Local branches were eliminated. All Scottrade clients’ long-term financial histories were purged. Fees were increased and functionality was reduced. The DoJ was specifically asked by citizens before the merger to set up protections if services were lost in the takeover. They refused to get involved in matters that impacted citizens, focusing only on impacts to TD Ameriteads’s bottom line. To add insult to injury, former Scottrade customers who sought equivalent service elsewhere (similar to ST; better than the new TDA) were hit with transfer fees they left for other brokerage firms. The DoJ remained unmoved.

      An almost identical mindset [blind-set] exists regarding the current bluff-crisis with the whole LTC (Long-term Care) health insurance policies. The many state Insurance Regulators rubber stamp whatever the LTC executives ask for, and never really protect the ordinary citizen who has faithfully paid their premiums for decades. The “story” is that management underfunded [mismanaged risk assesments] and now must increase premiums to exorbitant amounts in order to keep their 8-figure executives own long-term care[free] lifestyles intact. The reality is another result from the eliminaton of Glass-Steagall citizen protections … the boards of directors decided LTC is such a low-profit venture that they needed a way out. Why remain faithful to the contracts made with the now almost seniors who now need their LTC policies more than ever? Now that these insurance companies can make bigger profits in the venture-capital and market stakes (something that was dissallowed when Glass-Steagall was in full force) –they are increasing premiums as much as 250%, and will continue doing so as often as the Insurance Regulators work for them instead of us. They will be increasing premiums on average of every 5 years until their goal is achieved: outprice the seniors so they abandon their policies before having to go into a long-term-care facility. The worst culprit may be the Florida Insurance Regulator. They have a track record of refusing less than 10% of premium hikes asked by any and all types of ibsurabce companies. BCBS LTC of FL just increased LTC premiums by 25% in 2017, and received rubber-stamp approval to increase another 25.6% this year, and again in 2020 and again in 2021. They also received approval to do it again if requested in five years (most-likely dated from the 2019 stagger-start date instead of the stagger end-date of 2021 … thus, making the “5-year” rule actually 2-year waiting period.

      Favoring large corps over citizens extends beyond mergers; it’s old-hat with bankrupt proceedings. Toys-R-Us was the latest high-profile case — as usual, big headlines, yet no detailed reporting. Their executives gave themselves millions of dollars in “special bonuses” less than a year before filing. Then they knowingly over-extended their third-party purchases so ‘defaults’ to creditors and employees would appear to justify the bankruptcy they planned for (i.e., creating a smokescreen for buying themselves golden lifeboats and leaving the employees tlon the sinking ship). Through all of it, the courts supported the execs, not the employees.

      This is exactly what is happening with the entertainment business. ATT wants control of market share. Providing us good service and fair prices is not part of their business strategy. Controlling our provider options and eliminating our choices is the bottom-line plan discussed behind those board room doors.

      Our courts are bought and paid for … Judge Richard J. Leon is just one of the many examples where our courts are in the pockets of the congolerates.

      These District Judges are erasing 500-years of contract law meant to protect both parties equally.

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