Starz and Encore channels went dark on Altice USA cable systems in New York area as the new year dawned and the sides failed to come to terms on a new carriage agreement.

Altice said in a statement that Starz refused the MVPD’s efforts to set a short-term contract extension while negotiations continued past the midnight ET deadline. Starz said it remained open to negotiations and blamed Altice for yanking the channels.

Altice USA, which serves about 4.9 million subscribers in the New York area as well as in Midwestern states, maintains that Starz is seeking rate hikes that would force Altice to charge its subscribers more than the cost of Starz’s stand-alone streaming service.

“We are focused on providing the best content experience for our customers and continually evaluate which channels meet their needs and preferences relative to the cost of the programming imposed by content owners,” Altice USA said in a statement. “Given that Starz is available to all consumers directly through Starz’ own over-the-top streaming service, we don’t believe it makes sense to charge all of our customers for Starz programming, particularly when their viewership is declining and the majority of our customers don’t watch Starz.”

Starz in a statement said Altice “has shown an unwillingness to negotiate in good faith to the detriment of our shared customers, and they have removed Starz from their platform. We remain available to discuss a fair and reasonable agreement that will serve the interests of our loyal subscribers.”

Altice USA said it would replace the 17 Starz-Encore channels with a package of movie channels that include Hallmark Drama, Sony Movies, MGM HD, HD Net Movies, Flixand Cowboy Channel. Altice said “certain customers” will be given Showtime sibling The Movie Channel for free. 

Altice emphasized that subscribers who want Starz-Encore can easily access the programming by subscribing to the streaming app directly from Starz. Starz counters that it has been able to set carriage pacts with MVPDs including Verizon Fios and Hulu’s digital channel package service in recent months. Altice is said to have offered to package Starz as an a la carte streaming option with its broadband service.

Altice has talked tough about reining in programming costs ever since the Netherlands-based telecom group barreled into the U.S. MVPD marketplace with its purchase of cable operators Cablevision and Suddenlink in 2015 and 2016. The company’s Altice USA operation went public in June but has seen its share price slide more than 30% since November.

Starz was acquired last year by Lionsgate for $4.4 billion. The contract standoff with Altice comes at a less-than-optimal time for the cabler as its two biggest shows, dramas “Power” and “Outlander,” are between seasons and not serving up new episodes at present.

(Pictured: Starz drama “Outlander”)