By Kenneth Li
(Reuters) - AT&T Inc's (N:T) WarnerMedia has accused the U.S. Department of Justice of "collaborating" with Dish Network Corp (O:DISH) in a high profile dispute over carrying HBO and Cinemax.
For the first time in its 40-year history, Warner Media's HBO, known for its award winning TV series "Game of Thrones" and "The Sopranos," went dark on Dish's satellite television service on Thursday after a disagreement over a new distribution deal.
About 2.5 million of Dish's 13 million customers subscribe to HBO or Cinemax, according to one person familiar with the matter. AT&T also owns DirecTV, a satellite TV rival to Dish.
WarnerMedia said it had offered to extend the contract to continue discussing a new deal but Dish executives declined to negotiate further.
"Dish’s proposals and actions made it clear they never intended to seriously negotiate an agreement," said Simon Sutton, HBO President and Chief Revenue Officer.
The dispute could be a public relations blow to AT&T, which is heading back into court in December when oral arguments begin in the DOJ's appeal of the antitrust decision approving the No. 2 U.S. wireless carrier's $85 billion deal to buy Time Warner.
"This behaviour, unfortunately, is consistent with what the Department of Justice predicted would result from the merger," a DOJ representative said. "We are hopeful the Court of Appeals will correct the errors of the District Court.”
The Justice Department's statement was amplified by Fox Business Network journalist Charlie Gasparino's tweet on the matter.
AT&T fired back: “The Department of Justice collaborated closely with Dish in its unsuccessful lawsuit to block our merger," a WarnerMedia spokesman said in a statement. "That collaboration continues to this day with Dish’s tactical decision to drop HBO – not the other way around. DOJ failed to prove its claims about HBO at trial and then abandoned them on appeal.”
Dish declined comment on the accusation.
"The merger created for AT&T immense power over consumers," said Andy LeCuyer, DISH senior vice president of programming, in a prepared statement. "It seems AT&T is implementing a new strategy to shut off its recently acquired content from other distributors."
Dish testified against the deal in March, arguing that AT&T's concession to get the deal done was not strong enough to protect competitors. AT&T proposed that for seven years it would submit to third-party arbitration any disagreement with distributors over the pricing for Time Warner's networks and promise not to black out programming during arbitration.