Sling TV chief calls AT&T carriage behavior ‘anti-competitive’

Sling TV President Warren Schlichting being interviewed at the 2019 FierceVideo Pay TV Show. (FierceVideo)

DENVER — Neither Dish Network nor its Sling TV business have reached terms for HBO since October 2018 when HBO and Cinemax channels went dark for them. Sling and Dish have not been able to agree to terms with AT&T on a new programming carriage contract.

During the first quarter 2019, Dish lost about 266,000 pay TV subscribers, while Sling garnered approximately 7,000 new subscribers.

RELATED: Dish Network loses 266K satellite subscribers as HBO spat continues

At today’s FierceVideo Pay TV event in Denver, Sling TV’s Group President Warren Schlichting was immediately asked about the HBO dispute. Schlichting had testified in March 2018 that the merger of AT&T and Time Warner would result in too much power for AT&T/Time Warner in carriage negotiations.

Today Schlichting said, “What we thought would happen, we think is actually happening. It feels like anti-competitive behavior, and it feels like the consumer loses. If you serve rural America like Dish, those consumers have no other way of getting HBO. And it didn’t need to happen."

Pause, Restart

Dish Network’s Sling TV offers a small lineup of networks distributed over the internet at low price points, with its lowest price at $25 per month. Sling doesn’t require any contract, commitment or equipment. “For us, it’s a way to keep people in the ecosystem,” said Schlichting. “Let’s embrace the idea of restarts and pauses. We don’t talk about churn the same way anymore.”

Instead of focusing on pay subscribers, Sling TV “is an awesome advertising opportunity,” he said. “We have people watching TV with digital and demographic targeting. Our platform is about stability and making sure advertisers have this extraordinary targeting. Sling is leading that parade.” He mentioned others that he considers are copying Sling’s model such as DirecTV Now, FuboTV and Hulu.

RELATED: DirecTV Now ‘sustainable’ at $50 price point, AT&T CEO says

During AT&T’s most recent earnings call, CEO Randall Stephenson said DirecTV Now suffered another quarter of subscriber losses, but at current prices, the product is reaching sustainable levels.

Schlichting said today, “By our numbers, we think we might be the only OTT service with a positive growth margin. Every subscriber helps us defray fixed costs. I think if you’re losing money on every subscriber, I think you’re seeing CFOs saying we can’t sustain a loss forever.”

But he went back to programming costs, which he said are rising at a compound annual rate of 25%. “Programming costs only go one way,” said Schlichting. “Programming costs have caught up to everybody in the space. We’ve only raised our price one time. Those rates are really what’s choking.”

In addition to DirecTV Now, AT&T is planning a new streaming service. And earlier today, speaking at a JP Morgan technology conference, Stephenson said WarnerMedia is prepared to take content back from rivals for its upcoming direct-to-consumer WarnerMedia SVOD service, according to the Hollywood Reporter.