UPDATED, 3:30 PM: The Justice Department said today that it has reached a settlement in the case of information swaps involving AT&T’s DirecTV and rival pay TV outlets about talks to broadcast Los Angeles Dodgers games in SoCal. Reuters reported that the deal requires the companies also to monitor some communications that their executives have with competitors and to implement compliance programs. The settlement does not mandate that any pay-TV company to carry Spectrum SportsNet LA, which airs Dodgers games exclusively in the area, but does require DirecTV to refrain from swapping competitively sensitive information with rivals
PREVIOUSLY, November 2: The Justice Department sued AT&T’s DirecTV today saying that it was “the ringleader of a series of unlawful information exchanges” to keep SportsNet LA, the Los Angeles Dodgers’s cable home, off of pay TV.
The suit filed at U.S. District Court in California’s Central District, says that DirecTV exchanged “competitively-sensitive information” with Cox, Charter, and — before it was acquired — AT&T.
“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 Antitrust Division says. “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.”
The government wants the court to order AT&T and DirecTV to monitor and report any future contacts between the executives it says illegally traded information, train execs about how to comply with antitrust laws, and compensate DOJ for the cost of the suit.
“This offense is likely to continue and recur unless the requested relief is granted,” the suit says.
AT&T says that 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.”
Time Warner Cable has been on the hook since 2014 when it committed $8.35 billion for a 25-year hold on Dodgers rights. The cable operator is now owned by Charter Communications.
The DOJ suit says that DirecTV Chief Content Officer Daniel York shared with Cox, Charter (before the TWC deal) and AT&T “non-public information about the status of DirecTV’s negotiations with TWC and DirecTV’s future carriage plans and, in return, learned similar non-public information from each of these competitors.”
That enabled them to unite in opposition to a deal, the suit charges, because “they no longer had to fear that a decision to refrain from carriage would result in subscribers switching to a competitor that offered the channel.”
The Justice Department action follows AT&T’s agreement to pay $85 billion for Time Warner — which spun off Time Warner Cable in 2009.
Public Knowledge Senior Counsel John Bergmayer says the charges show that “merger conditions that are designed to control the behavior of large companies can be difficult to enforce.” As a result, “the best path is for the Department of Justice to block deals that would harm competition.”