AT&T and Dish’s HBO battle is the bleak future of cable and streaming

AT&T and Dish’s HBO battle is the bleak future of cable and streaming

November 2, 2018 0 By Nazmul Khan


Yesterday, Dish customers lost access to HBO due to an ongoing licensing dispute between the premium cable channel and the TV distributor. It marks the first time in HBO’s 40-plus-year history that it’s gone dark. This sort of thing seems to happen every once in a while in the cable industry, but it also might be the first indication of the closed-off cable nightmare that could be in our future as companies like Comcast, AT&T, and Disney take control of ever-larger chunks of the media landscape.

HBO is owned by WarnerMedia, which was acquired as part of AT&T’s massive Time Warner acquisition earlier this year. Back when AT&T was arguing that it should be allowed to merge in the first place, one of the Department of Justice’s complaints was that AT&T might leverage its ownership of content to drive users away from streaming services like Sling TV over to its own DirecTV Now service.

Of course, AT&T said that it would never do such a thing since it would be making money off of those licenses. The government had no good response to that, leading Judge Richard Leon to dismiss the argument, commenting, “The benefits associated with AT&T customers accessing virtual MVPD content continue to accrue even when they use DirecTV Now’s competitors like Sling and YouTube TV.”

But suddenly, the Department of Justice’s claim has started to look a lot more convincing. In that light, the ongoing Dish feud looks less like an ordinary fight over subscriber fees and more like AT&T is demanding more money for carrying its channels — money Dish would rather not pay.

WarnerMedia is happy to send customers to a cable company that will pay its prices or meet its subscriber quota. As HBO commented in its reaction to the Dish shutdown, “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.” In other words: it knows that you’ll still pay for HBO. And if Dish won’t pay up, it’ll send you over to someone who will.

And even in some kind of unthinkable, scorched-earth scenario where suddenly no cable company or over-the-top streaming service wants to pay AT&T’s price for HBO and Game of Thrones, that’s fine, too. That just means more users will be driven into the welcoming arms of the AT&T-owned DirecTV, DirecTV Now, and HBO Now services.


Game of Thrones

Or why make deals with cable companies at all when you could just create your own streaming service to distribute all your content in a single, consolidated bundle? It’s just like the one AT&T’s WarnerMedia is planning to launch in 2019, combining HBO, Turner, and Warner Bros. properties into an “HBO Plus”-style service.

When that service was first announced, WarnerMedia CEO John Stankey said that the company will continue to balance its existing deals with cable and satellite distributors alongside the new service. But if the Dish dispute is any example for the future, it’s easy to imagine a world where AT&T uses the power of its properties to simply demand whatever funds it wants from distributors, or it will leave them in the dust.

This kind of hardball bargaining will only become more common as more and more entertainment companies start to consolidate with network owners. When you own the content and you own a network to distribute it, the math starts to change when you factor in letting other companies have a piece of it when those customers could be paying you instead. We’re already seeing the beginning of that: Disney’s pulling its content from Netflix in favor of its own upcoming streaming service.

Some of the results of these moves are kind of innocent on the surface. Free HBO with your AT&T subscription. X-Men are showing up in Marvel movies, which seems fine. Streaming services might not count toward your cellular bills, and that is also nice. But the free perks and the fun things are the start of a slippery slope that ends in extremely siloed-off media empires that don’t compete on services or prices simply because they don’t have to. Imagine the sort of competitive gridlock that internet in the US has reached, but apply it to streaming networks, too.

HBO / WarnerMedia / AT&T say that this is just business as usual. According to WarnerMedia, Dish had the chance to extend its old deal before AT&T merger talks even began, adding it was Dish’s decision to take the signal down, not HBO’s. WarnerMedia also says that Dish has a history of using channel takedowns as a hardball negotiating tactic, and there may be some truth to that: Dish customers had Fox News blacked out in 2014, CBS in 2017, and Univision has been blacked out for the last three months.

It’s still possible that this is just a routine dispute and that AT&T and Dish will sort this out before the weekend is through. But as these sorts of corporate conglomerates continue to grow and expand with more and more competing streaming services, the potential for AT&T and WarnerMedia (and their contemporaries) is only growing. And if these issues haven’t already started to come up, it’s virtually guaranteed that they will in the future. When they do, it’s customers who will be caught in the middle.



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