DOJ Sues AT&T, DirecTV for Collusion

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AT&T and DirecTV are the targets of an antitrust lawsuit recently filed the U.S. Department of Justice for their involvement in an unlawful plot that kept the Los Angeles Dodgers’ channel off air.

DirecTV, and its parent company AT&T, unlawfully shared private negotiation information with rivals such as Cox Communications and Charter Communications in 2014 in order to gain collective competitive advantage, according to the DOJ suit filed in the District Court for the Central District of California on Wednesday.

The pay TV provider, which was acquired by AT&T in 2014, provided sensitive information to these direct competitors to help them in their negotiations with the Dodgers’ SportsNet LA, a channel which has exclusive rights to almost all live telecasts of the baseball team in the LA area.

The Justice Department said these companies shared information on whether or not to carry the channel so as to have an upper hand over Time Warner Cable, which sold licenses to other networks for them to air the channel. The pay TV providers hoped to gain bargaining leverage by ensuring other companies would not carry live Dodgers games, so customers wouldn’t have to switch providers.

Many people in the Los Angeles area are without access to the Dodgers Channel – as many as 3 million homes, according to the Washington Post.

“Dodgers fans were denied a fair competitive process when DirecTV orchestrated a series of information exchanges with direct competitors that ultimately made consumers less likely to be able to watch their home team,” DOJ Deputy Attorney General Jonathan Sallet said in a release. “Competition, not collusion, best serves consumers and that is especially true when, as with pay-television providers, consumers have only a handful of choices in the marketplace.”

DirecTV, which was acquired by AT&T in a $49 billion deal, was described as the mastermind of the entire plot. Its chief content officer Daniel York was alleged to have intentionally traded information with Cox and Charter to cut the price TV providers would have to pay to air the Dodgers Channel. The DOJ said review of internal communications indicated CEO Mike White felt the companies could “have more leverage if we all stick together.”

Time Warner Cable, which paid $8.35 billion in 2013 for rights to air Dodgers games for 25 years, initially wanted to charge TV networks $4.90 a month per subscriber for licenses to air games of the LA Dodgers. It was forced to reduce the price to $3.50 in March as a result of opposition from pay TV providers, including DirecTV.

SportsNet LA is still not being aired on AT&T, DirecTV and Cox. But the channel is now available on Charter, which bought Time Warner Cable last year.

In a statement released after the announcement of the DOJ suit, AT&T defended its decision not to air Dodgers games. Its general counsel David McAtee said no other major pay-TV provider was ready to “force all their customers to pay the inflated prices that Time Warner Cable was demanding for a channel devoted solely to LA Dodgers baseball.”

The DOJ suit is a distraction AT&T could do without at a time it is trying to get regulators’ approval of its takeover of Time Warner. The telecom giant has argued that the illegal information sharing was done before it bought DirecTV.

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