AT&T's move affects some five million US households, a significant hit for Al-Jazeera America, which had said some 40 million homes were expected to have the channel available.
"Unfortunately AT&T's decision to unilaterally delete Al-Jazeera America presented us with circumstances that were untenable -- an affiliate that has willfully and knowingly breached its contractual obligations," a statement from Al-Jazeera America said yesterday.
"Accordingly, we had no choice but to take this action and to enforce Al Jazeera America's rights under its agreement with AT&T -- and to compel AT&T to do the right thing."
"As a result of our inability to come to terms on a new agreement and due to certain breaches by Al-Jazeera of the existing agreement we have decided not to carry Current TV on U-verse," Siegel said in a prepared statement.
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The channel, operated by the Qatari media group behind the Middle East's biggest satellite broadcaster, went live yesterday.
The launch was accompanied by a big promotional push, and it pledged to outdo its rivals with serious, in-depth journalism.
But main the selling point will be long-form reporting of stories overlooked by other news organizations.
It is likely to face a tough sell to US audiences because of its history in the Middle East, where it was the outlet for videos distributed by Al-Qaeda and Osama bin Laden.
Some in America regard Al-Jazeera's output as anti-Western.
Al-Jazeera is also in negotiations with Time Warner Cable over carrying the channel.