Updated: Hallmark Channels, AT&T U-verse Stuck In Negotiating Neutral As Carriage Deadline Nears

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Carriage renewal negotiations between Hallmark Channels and AT&T U-verse have stalled and could result in a disconnect for the programmer on the telco's video lineup next week.

The contract is set to expire at midnight on Aug. 31. Hallmark officials indicated that AT&T U-verse sent postcards, dated Aug. 1, to its customers about the possible loss of Hallmark Channel and its sister service Hallmark Movie Channel if a new deal isn't consummated by that deadline. More recently, AT&T notified Hallmark Channels of the potential drop.

The programmer is asking viewers  to call 1-888-MADE-4-FAMILY or go to www.donttakemyhallmarkchannels.com to request to keep the networks on AT&T's air.

For its part, AT&T pointed its subscribers to an informational Web page, att.com/fighting4you, pronouncing its position, while also recommending they call Hallmark at 1-877-677-6585.

The following is the telco's statement, which expresses surprise that Hallmark has brought the matter to the public's attention and gets to the heart of almost all carriage negotiations: pricing.

"We are making every effort to reach a fair agreement and continue providing these channels to our customers. Frankly, we're surprised that Hallmark has decided to take its negotiations public, instead of working with us in good faith, especially since we've made numerous offers to Hallmark. We're disappointed that Hallmark is acting in a way that may punish viewers and is trying to charge AT&T more than what similarly-sized and smaller TV competitors pay for these channels. We want to continue to carry the channels under terms similar to our current agreement," said AT&T.

"We don't want customers to lose their programming. We're fighting for a fair deal because our customers deserve the programming they want, at a fair price. We want to reach an agreement that is fair to our subscribers and for all parties, as we have with numerous other content providers."

Earlier, Hallmark Channels president and CEO Bill Abbott had weighed in: "Hallmark Channels has been a good partner and supporter of AT&T U-verse since they launched their service, and we have been negotiating in good faith with them. We hope AT&T will recognize the extraordinary value of our channels and renew the carriage agreement. At the present time, however, talks are not progressing and it is looking more likely that Hallmark Channels will be dropped from AT&T. This would be a tremendous loss to viewers who look to Hallmark Channels, America's most trusted family networks, for programming that connects people emotionally."

Added Joan Gundlach, the programmer's executive vice president, distribution: "AT&T U-verse TV recently went through a notable carriage renewal and is implementing the scare tactics it used to negotiate with another programmer against Hallmark Channels, one of the nation's last surviving independent cable networks. It is disappointing that AT&T U-verse does not see the value we bring to their customers and that they would wield their power to strong-arm our channels."

Gundlach's remarks alluded to a public carriage dispute between the telco and Rainbow Media Holdings, which was resolved in mid-July with renewals for AMC, IFC and We TV and Sundance Channel. AT&T and Rainbow's contract expired on July 1, but a negotiating period was extended through July 14.

Should Hallmark Channels and AT&T U-verse become involved in a protracted impasse, the telco's viewers could miss the start of a new season of The Martha Stewart Show on Sept. 13, under the programmer's deal with Martha Stewart Living Omnimedia to provide a daytime lifestyle programming block on Hallmark Channel.

The deadline for the expiration of Hallmark Channels/AT&T U-verse contract comes just two days before a potentially much larger service disruption: The deal between Time Warner Cable and The Walt Disney Co. ends at midnight on Sept. 2.

Those negotiations are drawing the attention of executives throughout the distribution and programming communities, as well as Washington officials.

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