AT&T ‘Very Anticompetitive’ in Its HBO Carriage Strategy, Says Dish's Ergen
Dish Network Chairman Charlie Ergen shot down an analyst who questioned Wednesday whether it makes sense for Dish to discuss a joint venture with AT&T’s DirecTV to "share costs" amid subscriber declines for both "core" satellite TV businesses. “If they’re sticking a gun to your head and taking HBO away, you’re probably not having a lot of conversations,” said Ergen of AT&T on a Q4 call (replay here). “We’re not real good at guns at our heads.”
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HBO went dark on Dish in November, Ergen alleges, after AT&T demanded that Dish pay for a guaranteed number of HBO subscribers regardless of how many want the channel (see 1811070030). Net satellite subscriber losses at Dish in 2018 grew to 1.13 million from 995,000 in 2017, said an SEC filing. CEO Erik Carlson said on the call that roughly half the 2018 subscriber declines were attributable to the Univision (see 1808030039) and HBO blackouts. With Game of Thrones season 8 premiering on HBO in April, “that could impact us if we’re not able to reach an agreement” with AT&T, said Carlson. Ergen said on previous calls he thinks the Univision blackout likely is permanent.
It's “always a disappointment when you lose a long-term partner” like HBO, said Ergen. “AT&T has taken a very anticompetitive approach to carriage” of the channel, he said. “They view Dish potentially as one of their larger competitors. They made a decision not to engage in any kind of conversation.”
The “downside” of AT&T’s HBO strategy is that “customers love Dish,” and they “like their Hopper experience,” said Ergen. “Some customers do leave us because HBO is a very strong brand,” but others “find they can live without it,” or resort to pirating the signal, he said. "Every young person knows how to go on the internet and get a code and watch HBO for free, and so you end up with a piracy issue that unfortunately we prefer not to see. But when customers get stuff taken away, they resort to other means.” AT&T declined comment.
Despite expressing worries in the past over FCC “skepticism” with Dish’s ability to execute on its narrowband IoT buildout strategy by the March 2020 deadline (see 1808030039), Ergen won’t speculate about what happens if the commission rules against Dish on the buildout requirements. “If the FCC is serious about getting spectrum put to use, we would expect that the FCC would at least rule on the current application in front of them,” said Ergen. If the FCC blocks the buildout, Dish probably would pursue litigation, he said: “I might preface it with, that’s not going to happen.” The regulator declined comment.
Should the commission still have “issues” with Dish’s buildout plans, “we’d certainly like to know it sooner rather than later,” said Ergen. Dish “is coming under a different level of scrutiny” at the FCC than “probably any other wireless provider has,” but Ergen doubts the commission “is looking to change the rules on flexible use” of spectrum, he said. As FCC staffers come to “understand more about what we’re doing” in 5G and narrowband IoT, “maybe I’m Pollyanna, but I think the FCC will be supportive of that,” he said. “This is a great FCC for trying to be supportive of getting wireless assets used better.”