AT&T Inc. on Wednesday dropped Crown Media Holdings’ two Hallmark channels from its U-verse cable TV lineup after the companies failed to reach a new contract.

About 2.5 million AT&T U-verse customers are affected by the decision, which came after negotiations broke down last month between the Dallas telecommunication company and the Studio City owner of the Hallmark and Hallmark Movie channels.

“We are very disappointed that Hallmark has refused to provide AT&T and its customers with a fair deal,” AT&T said in a statement. “We offered to extend the current deal while talks continued, and Hallmark rejected that offer.”

Crown believes it is justified in seeking better deals from carriers based on a new block of programming by Martha Stewart Living Omnimedia that will premiere Sept. 13 on the Hallmark Channel. The company said it is willing to re-start negotiations as long as they are “fair and in good faith”.

“I was stunned by the apparent disregard for the facts in AT&T’s recent statement regarding our negotiations,” Chief Executive Bill Abbott said in a statement.

The company claims that its fans among U-verse viewers have been peppering AT&T with pleas to keep the networks since being informed of the possible cancellation in early August.

Crown shares closed up 16 cents, or 7.6 percent, to $2.26 on the Nasdaq.