Dish Network and HBO continue to be at loggerheads five months after the premium channel went dark to about 3 million of the satellite-TV service provider’s customers.
And despite the looming April 14 premiere of one of the channel’s biggest hits in history — Game of Thrones — there are no clear signs that a deal will be reached.
HBO went dark to Dish customers on Nov. 1, after the two parties couldn’t come to a carriage agreement. It was the first time in HBO’s 46-year history that it failed to secure a carriage deal with a major carrier.
Dish at the time characterized the blackout as retaliation for its opposition to the merger between AT&T and HBO’s former parent Time Warner, while HBO said its goal has been for its subscribers to have uninterrupted access to its shows. In a statement last week, HBO said it did not see a resolution to the dispute coming soon.
“There has been no meaningful engagement by Dish regarding terms for the carriage of HBO and Cinemax on its platforms,” the programmer said. “HBO derives no benefit from Dish preventing their customers access to our services, and continues to be deeply disappointed that Dish took them down. We do not foresee HBO and Cinemax returning to Dish or Sling before Game of Thrones premieres.”
Distributors Push Back
The blackout is unusual because premium channels normally cut deals that are largely skewed toward the distributor. In recent months, though, other operators have pushed back against what they claim are exorbitant pricing demands from premium programmers that sell streaming video services to their customers at a lower rate.
Altice USA got into a similar scuffle with premium channel Starz last year, peeved that the network was charging customers $8.99 per month for its streaming service while the operator had to charge $11.95 per month. That dispute was resolved after a five-week blackout.
As of press time, the Dish-HBO dispute had entered its sixth month with no resolution.
Dish is no stranger to blackouts. It did without Spanish-language broadcaster Univision for nine months, reaching a deal in March to return its cable and broadcast channels to the satellite service but losing a ton of subscribers along the way — more than 600,000 by some estimates. The deal, terms of which were not disclosed, was reached despite Dish chairman Charlie Ergen saying last June that the blackout would “probably be permanent.”
In a note to clients, Wolfe Research managing director Marci Ryvicker said the return of Univison was surprising. “Looks like Charlie [Ergen] doesn’t really believe in ‘permanent,’ ” Ryvicker wrote, noting Univision covers about 5 million Dish subscribers.
Dish has a total of about 12.3 million satellite TV and streaming customers, so technically, it could weather a lengthy HBO blackout. And customers could get the premium network in other ways, especially by subscribing to standalone streaming service HBO Now.
Though streaming is fast becoming a viable alternative in pay TV carriage disputes, Dish subscribers primarily reside in rural markets where broadband service is spotty at best.
Subscriber Loss Pressure
Both companies are under intense pressure to stem subscriber losses. Dish lost a record 384,000 satellite TV customers in the fourth quarter, primarily because of the Univision and HBO blackouts. HBO just lost its CEO, Richard Plepler, and is undergoing sweeping structural changes as it is absorbed, along with the Turner networks, into WarnerMedia Entertainment, now headed by former NBCUniversal Entertainment CEO Bob Greenblatt, and probably can’t afford a big drop in its customer base either.
Given Dish’s past history, analysts are expecting the dispute to have an impact. Pivotal Research Group CEO and senior media & communications analyst Jeff Woldarczak predicted that Dish would lose about 300,000 satellite TV customers in Q1, worse than in the prior year quarter but better than Q4 2018. UBS media and telecom analyst John Hodulik expects Dish to shed about 333,000 total pay TV customers in Q1, nearly double the 185,000 it lost in Q1 2018.
Bandwidth Consulting CEO Bryan Rader, in a conference call April 1 with Evercore ISI media analyst Vijay Jayant, said he doesn’t believe that Dish customers under contract want to terminate service early just because of the HBO dispute. But that attitude changes once they roll off promotional deals.
“We believe as those customers are coming off of contract in the first quarter they are terminating and going to other providers,” Rader said on the call.
Ergen said on Dish’s earnings conference call in February that while HBO has a strong brand, “some customers find that they can live without it.”
For those that can’t, he added they will find other ways to watch, either by going to a friend’s house or sharing streaming passwords.
Even if Dish and HBO make nice by the April 14 premiere, more perils could be coming for the satellite-TV provider. According to reports, Dish’s deal to carry the Fox regional sports networks — currently being auctioned by The Walt Disney Co., which is expected to close a deal by mid-June — expires in the summer.
Dish carries several Fox RSNs, but it hasn’t been afraid to shun networks it thinks are too expensive. The satellite giant hasn’t carried New York area RSNs MSG Network or SNY for several years.
