AT&T TV Service Drops Hallmark Channels After Fee Negotiations Break Down

AT&T Inc.’s U-Verse TV service dropped the Hallmark Channel and Hallmark Movie Channel after negotiations for a new distribution agreement broke down.

Talks came to a standstill Aug. 26 and the channels went dark just after midnight New York time today, Hallmark Channel owner Crown Media Holdings Inc. said today in a statement. AT&T, in a separate statement, said its offer to extend the current deal while talks continued was rejected.

The dispute between Dallas-based AT&T and Crown Media in Studio City, California, is the latest price disagreement as content owners press for a greater share of subscriber income from pay-TV operators. Time Warner Cable Inc. and Walt Disney Co. are also in the midst of fee negotiations.

Hallmark Channel, which is set to begin airing “The Martha Stewart Show” Sept. 13, said it’s willing to restart talks if they are “fair and in good faith,” according to the statement.

“If they are really serious, my team and I are ready for truly fair negotiations,” Bill Abbott, Chief Executive Officer of Hallmark Channels, said in the statement.

AT&T said it was disappointed that the channels wouldn’t agree to a deal that was “no worse than similarly-sized and smaller providers.” U-Verse replaced the channels with a free preview of Starz Kids & Family and Turner Classic Movies.

AT&T rose 32 cents to $27.35 at 4 p.m. in New York Stock Exchange composite trading. Crown Media gained 16 cents, or 7.6 percent, to $2.26 on the Nasdaq Stock Market.

To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net

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