On Wednesday, the United States Department of Justice issued a suit against AT&T (NYSE: T) under the allegation that its DirecTV television unit had finely orchestrated an illegal campaign to widely block carriage of the LA Dodgers television channel.
In the lawsuit, filed in federal court in Los Angeles, the US DoJ accused DirecTV of leading an effort to ensure that three other pay-TV companies—Cox Communications, Charter Communications, and AT&T (who was, at the time, separate from DirecTV) would refuse to provide service for SportsNet LA. This is the TV channel owned by the Los Angeles Dodgers professional baseball team.
The lawsuit goes on to allege that the four companies colluded under illegal conduct by sharing nonpublic information between themselves in order to gain more bargaining leverage for negotiations with Time Warner Cable. At the time, TWC was having trouble getting pay TV companies to sign up for the SportsNet LA channel.
The complaint details: “A significant number of Dodgers fans have had no opportunity in recent years to watch their team play on television because overlapping and competitive pay television providers did not telecast Dodgers games. Those consumers were deprived of a fair competitive process when DirecTV unlawfully exchanged strategic information with three competitors during their parallel negotiations.”
Of course AT&T now owns DirecTV and has refused to carry the channel; as has Cox Communications. They both cite high cost as the reason.
According to United States Department of Justice division of antitrust Deputy Assistant Attorney General Jonathan Sallet, “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.” He makes sure to add, “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.”
Responding to the suit, AT&T (NYSE: T) general counsel, David McAtee comments, “We respect the [Justice Department’s] important role in protecting consumers, but in this case, which occurred before AT&T’s acquisition of DIRECTV, we see the facts differently.”
Indeed, he argues, instead, that no other major TV provider opted to carry the content has to do with the fact 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 L.A. Dodgers baseball. We make our carriage decisions independently, legally and only after thorough negotiations with the content owner. We look forward to presenting
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.