The US Department of Justice has said it is suing telco AT&T and its DirecTV satellite operator for 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.
SportsNet LA, which is operated by pay-television operator Time Warner Cable, holds the rights to broadcast almost all live games of Major League Baseball franchise the Los Angeles Dodgers in the Los Angeles area.
The lawsuit, filed in the U.S. District Court for the Central District of California, alleges that DirecTV unlawfully exchanged competitively-sensitive information with Cox Communications, Charter Communications and AT&T during the companies’ negotiations for the right to broadcast SportsNet LA.
Specifically, the complaint alleges that DirecTV and each of the competitors agreed to and did exchange non-public information about their companies’ ongoing negotiations to broadcast SportsNet LA, as well as their companies’ future plans to carry – or not carry – the channel.
The complaint also alleges that the companies engaged in this conduct in order unlawfully to obtain bargaining leverage and to reduce the risk that they would lose subscribers if they decided not to carry the channel but a competitor chose to do so. The complaint further alleges that the information learned through these agreements was a material factor in the companies’ decisions not to carry the channel.
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 concerns the period before DirecTV was purchased by AT&T in 2014, a deal that was approved last year.
“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 hometown team,” deputy assistant attorney general Jonathan Sallet of the Justice Department’s Antitrust Division said. “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.”
In response to the DOJ’s move, AT&T general counsel David McAtee said: “We respect the DOJ’s important role in protecting consumers, but in this case, which occurred before AT&T’s acquisition of DirecTV, we see the facts differently.
“The reason why no other major TV provider chose to carry this content was that no one wanted to force all of their customers to pay the inflated prices that Time Warner Cable was demanding for a channel devoted solely to LA Dodgers baseball. We make our carriage decisions independently, legally and only after thorough negotiations with the content owner. We look forward to presenting these facts in court.”
SportsNet LA launched in February 2014 as part of the Dodgers’ exclusive local rights deal with TWC. Time Warner Cable holds a 25-year deal, from 2014 to 2038, for the Dodgers’ media rights in an agreement worth $8.35bn (€7.59bn).