3:16pm PT by Eriq Gardner
AMC Accuses AT&T of Doing What It Said It Wouldn't During Time Warner Merger Trial
It was called the "antitrust trial of the century," and AT&T prevailed in 2018. A federal judge allowed the telecom giant to swallow Time Warner for $108 billion over the U.S. Department of Justice's stated concern that AT&T shouldn't own networks like CNN, TBS, and TNT lest AT&T's cable and satellite rivals be terribly disadvantaged in licensing negotiations. The judge didn't buy the government's theory of the anticompetitive effect of increasing bargaining leverage from this vertical integration. The judgment survived appeal.
Now comes the next chapter as the Walking Dead network has filed a complaint at the Federal Communications Commission that accuses AT&T of engaging in the type of discriminatory conduct that it promised it wouldn't during the historic merger trial.
AT&T "is attempting to cause severe harm to the smaller and independent network AMC, which offers a fresh, independent and diverse voice on MVPDs’ channel lineups that is highly valued by subscribers, for the benefit of AT&T’s competing and similarly situated networks, TNT and HBO," states a complaint filed on Aug. 5, which until now has escaped public attention.
"This instant action requires AT&T to be held to its word that the Commission can use its regulatory powers – in this case, the program carriage rules – to address AT&T’s discriminatory and anticompetitive use of the disproportionate bargaining power that it now has as a result of the AT&T-Time Warner merger to unlawfully disadvantage a programming competitor," continues the complaint which claims a violation of Section 616 of the Communications Act of 1934.
AMC wants AT&T to be ordered to pay nondiscriminatory rates for carrying its programming plus pay a further penalty for violating communications law.
Although the 52-page document (plus more than a 100 pages of exhibits) is redacted with respect to the particulars of negotiations between the two companies, it appears the source of the friction comes down to two big things.
First, AMC is upset that AT&T is "increasing what it pays its own networks" and "pouring money into HBO’s programming content since its acquisition," while holding the line when it comes to a third party network like the one that airs Better Call Saul. The complainant points out that HBO and TNT's license agreements call for annual service fee increases. AMC asserts it's not getting equal treatment despite being a "must-have network."
Second, AMC objects to the online distribution restrictions that AT&T is apparently insisting upon in negotiations. The complaint notes that HBO content is carried on Hulu while TNT content can be accessed on Amazon Prime. The implication seems to be that AMC should be allowed to stream its content outside of AT&T's platforms without repercussions.
Asked for comment, an AT&T spokesperson says, " AMC Networks’ complaint is completely without merit. We treat all programmers fairly and will continue to work with AMC Networks to provide its content at a price that is reasonable to our customers."
An AMC spokesperson comments, "We have had a long and successful relationship with AT&T and we hope to continue our strong partnership well into the future. We are only asking AT&T to treat our networks fairly and not competitively disadvantage our programming and business interests as compared to the manner in which they treat their own networks like HBO and TNT.”
A separate petition from AMC warns that the license agreement is about to expire and that it could be forced into a decision about whether to take its networks off of AT&T or accept AT&T's demands. AMC wants the FCC to issue a standstill of the current licensing terms while negotiations continue and its main complaint is heard before the Commission.
Ironically, and noted in the newest complaint, the complaint comes as AT&T claims being the victim of vertical integration.
In late May, AT&T launched HBO Max, but the new streaming app is unavailable to customers using Amazon Fire devices. On a July 23 earnings call, AT&T CEO John Stankey hinted it might have something to do with Amazon wishing to favor its own streaming platform Prime. Stankey complained that " Amazon has taken an approach of treating HBO Max and its customers differently on how they’ve chosen to treat other services and their customers.”