HBO and Dish Escalate War of Words in Contract Dispute

Charlie Ergen - 2001 House Hearing - Getty - H 2018
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Dish chairman Charlie Ergen, addressing analysts Wednesday during an earnings call, spoke about "anti-competitive" behavior on the part of AT&T.

The contract dispute between HBO and Dish Network went into overdrive Wednesday when both parties blamed each other for the impasse and Dish chairman Charlie Ergen accused AT&T of using HBO as "a weapon" for the benefit of DirecTV, both of which are owned by the telecommunications giant.

Dish lost HBO a week ago, and Ergen, speaking to analysts during an earnings call Wednesday, attributed the situation to "anti-competitive" behavior on the part of AT&T, which acquired HBO when it purchased Time Warner. "AT&T knows full well that for many of our customers, the only place they can go is to DirecTV, and they own HBO and they own DirecTV, so they're willing to make that trade-off," he said.

After Ergen's remarks, which were echoed in a variety of ways by several top Dish executives, HBO chairman and CEO Richard Plepler called them "silly" in a lengthy statement issued to the press.

"It’s important to clarify that it was Dish who dropped the HBO and Cinemax signals at midnight on Oct. 31, not the other way around. In fact, we offered to extend our current contract while we continued negotiating. An idea that Dish initially agreed to and then oddly changed their mind about at the eleventh hour," reads part of Plepler's statement.

The sticking point in the negotiations is that HBO is insisting that Dish adhere to a minimum number of customers it would pay for, which wouldn't have been "unusual in an environment 20 years ago," Dish general counsel Timothy Messner said Wednesday.

DirecTV, Ergen noted, is "giving HBO away free for life. So, why would a customer pay Dish when they can get it from DirecTV free for life, right?"

"That would be malpractice," added Ergen. "There's no company that would sign up to a deal like that."

Ergen and others at Dish also said that the existence of HBO Now, a stand-alone streaming service, also hurts the chances that Dish would easily sell HBO to its customers, but HBO said Wednesday it offered Dish a competitive deal.

"The terms of our proposal were advantageous to Dish compared to their current deal," read Plepler's statement. "We’re actually perplexed by their unwillingness to take this proposal as an opportunity rather than perpetuating a conflict which only hurts consumers. The notion that AT&T had anything to do with our inability to reach a reasonable deal with Dish is simply not true. It seems to be a silly but transparent attempt on Dish's behalf to muddy the waters for reasons only they can explain."

Dish, meanwhile, reported its worst quarterly subscriber loss ever, losing 367,000 subscribers to its satellite TV service while gaining 26,000 subscribers to its Sling TV streaming product. Some of those losses were attributed to an ongoing blackout of Univision programming.