The US Department of Justice has said it has reached a settlement in a case that saw it sue telco AT&T and its DirecTV satellite operator for allegedly acting as the “ringleader” of a series of unlawful information exchanges between DirecTV and three of its competitors during carriage talks for regional pay-television channel SportsNet LA.
The DOJ said the settlement will prohibit DirecTV and AT&T from illegally sharing confidential, forward-looking information with competitors. However, the deal will not force AT&T to begin carrying SportsNet LA, which is owned by Major League Baseball franchise the Los Angeles Dodgers.
The DOJ’s Antitrust Division filed suit on November 2, alleging that DirecTV was the ringleader of a series of unlawful information exchanges between DirecTV and three of its competitors – Cox Communications, Charter Communications and AT&T – before it acquired DirecTV – during the companies’ negotiations to carry SportsNet LA, which holds the exclusive rights to broadcast almost all live Dodgers games in the Los Angeles area.
The DOJ said the settlement, which will obtain all of the relief sought by the department in its lawsuit, will ensure that when DirecTV and AT&T negotiate with providers of video programming, including negotiations to broadcast SportsNet LA, they will not illegally share competitively-sensitive information with their rivals.
The settlement also requires the companies to monitor certain communications their programming executives have with their rivals, and to implement antitrust training and compliance programs.
“When competitors email, text, or otherwise share confidential and strategically sensitive information with each other to avoid competing, consumers lose,” Acting Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division said. “The settlement promotes competition among pay-television providers and prevents AT&T and DirecTV from engaging in illegal conduct that thwarts the competitive process.”
According to the complaint, DirecTV’s chief content officer, Daniel York, unlawfully exchanged competitively-sensitive information with his counterparts at Cox, Charter and AT&T while they were each negotiating for the right to broadcast SportsNet LA.
The companies were alleged to have engaged in these unlawful information exchanges to decrease the risk that any individual company would lose subscribers by not carrying the channel while others did. The DOJ said eliminating this threat corrupted the competitive bargaining process and likely contributed to the lengthy blackout.
SportsNet LA is still not carried by DirecTV, Cox or AT&T, although it is now offered by Charter. The timeline of the DOJ complaint concerned the period before DirecTV was purchased by AT&T in 2014, a deal that was approved in 2015.
Earlier this month, the Dodgers and Charter, the company that markets SportsNet LA, opted to extend their rights partnership with LA-based broadcaster KLTA-TV. Under the deal, KLTA-TV will air 10 Dodgers games from the 2017 MLB season on a free-to-air basis as simulcasts of the SportsNet LA broadcast.
SportsNet LA launched in February 2014 as part of the Dodgers’ exclusive local rights deal with Time Warner Cable. TWC holds a 25-year deal, from 2014 to 2038, for the Dodgers’ media rights in an agreement worth $8.35bn (€7.88bn).