DOJ Hits DirecTV, Cable Cos. With Anti-Competition Lawsuit
DirecTV, Cox Communications, Charter Communications and AT&T were slapped with a lawsuit by the U.S. Department of Justice (DOJ) Wednesday charging that the multi-channel TV service providers colluded during negotiations with SportsNet LA, which has the rights to carry LA Dodgers games in the Los Angeles market.
The DOJ alleges that DirecTV, acting as ringleader, engaged in “unlawful information exchanges” with the other television program providers as each was engaged in contract negotiations for the right to carry the channel. Cox and Charter are direct competitors with DirecTV, while AT&T offers a competing telco TV service, but also recently became the new parent company of the nation’s largest satellite TV concern.
Read more on the DOJ’s lawsuit after the jump:
The lawsuit, which was filed in the U.S. District Court for the Central District of California, alleges DirecTV and each the competitors named exchanged “non-public information about their companies’ ongoing negotiations to telecast the Dodgers Channel, as well as their companies’ future plans to carry – or not carry – the channel.”
The complaint, which is seeking injunctive relief, alleges the unlawful activity was conducted in order to obtain bargaining leverage while reducing the risk of subscriber losses if any of the parties decided not to carry the channel. The DOJ lawsuit alleges that the information exchange “was a material factor in the companies’ decisions not to carry the Dodgers Channel,” which is still not carried after three years by DirecTV, Cox or AT&T.
“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,” Deputy Assistant Attorney General Jonathan Sallet of the Justice Department’s Antitrust Division said in a statement on the case.
Through most of the last three years in question, SportsNet LA was jointly owned by the Los Angeles Dodgers and Time Warner Cable. The latter was acquired in May by Charter Communications.
DirecTV, AT&T and Cox have refused to carry the channel, citing high carriage charges that DirecTV has said would cost each subscriber to its service in the LA market as much as an extra $5 a month, whether they watched the channel or not.
As of 2014, DirecTV had approximately 1.25 million video subscribers in the Los Angeles area, while AT&T had approximately 400,000 video subscribers in the area.
The DOJ lawsuit comes at a precarious time for AT&T, which recently announced its intent to acquire Time Warner Inc., and will need DOJ approvals to do so. Time Warner is separate from Time Warner Cable, which is part owner of SportsNet LA and as mentioned earlier was sold five months ago to Charter, one of the competitors named in the DOJ lawsuit.
The proposed acquisition of Time Warner by AT&T has already raised the ire of watchdog groups who have warned that the acquisition would give AT&T even more power over competitors with its varied media interests.
In a statement on the lawsuit, David McAtee, AT&T’s general counsel, 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.”
By Greg Tarr
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