In a keynote conversation at the NAB Show in Las Vegas, Department of Justice antitrust chief Makan Delrahim pointed to a carriage impasse between the UFC and DirecTV as proof of AT&T’s monopoly power now that it owns WarnerMedia.
Last month, ESPN signed an expanded deal with the UFC that makes the streaming platform the only way ultimate fighting fans can get the circuit’s 12 annual pay-per-view cards. The pact, which runs through 2025 and takes effect with Saturday’s UFC 236, is a major shift in pay-TV patterns. To Delrahim, AT&T-owned DirecTV was emboldened to cut bait with the UFC because of the array of programming and distribution assets it now controls.
“Once you have must-have content” such as sports rights, Delrahim told moderator Gordon Smith, CEO of the NAB, “you can cause harm to your competitors and to consumers.” Such was the core premise of the government’s assault on the $81 billion AT&T-Time Warner merger, which was the first lawsuit in 40 years that aimed to block a vertical deal. The case reached its official end in February when the government’s appeal was shot down by a federal court.
Asked by Smith to reflect on the case’s key points, Delrahim pointed to the UFC-DirecTV impasse, which hit home given his own viewing habits. “I’m a big fan of the Ultimate Fighting Championship, as some of you guys know, and they’re headquartered here in Las Vegas,” he said. In negotiations on a contract extension, DirecTV “refused to cut a 35-65 deal, which seemed to me pretty fair to me, but such is life. So, the market value is there when you’re an MVPD.”
Echoing the position of the Justice Dept. throughout its battle with AT&T, he said a company the size of AT&T would be willing to forego some short-term carriage revenue in exchange for broader benefits to its distribution systems. In AT&T’s case, it can enable the broadband that will allow its customers to access ESPN+, for example.
NAB chief Gordon Smith struck a congenial tone with Delrahim during the 30-minute conversation, noting that “a lot of people in this room” agreed with the battle against AT&T-Time Warner.
The conversation went into the weeds on many topics and touched only briefly on the $71.3 billion Disney-Fox deal, which the DOJ blessed with the only proviso that Disney sell off Fox’s regional sports networks.
Delrahim himself brought up one of the other newsmaking events of his 18-month tenure at the Justice Dept.: his siding with Netflix in its ongoing tangle with the Academy of Motion Picture Arts and Sciences. Steven Spielberg has publicly urged the Academy to toughen its eligibility rules for streaming-service films from Netflix and others, but the DOJ warned the organization that such a move could have antitrust implications.
“The business of life is about making friends,” Delrahim observed of his tenure as the nation’s top anti-monopoly cop. With a bit of a wink, he added, “I have made friends with some of your members [of the NAB], AT&T, recently with the Oscars and Spielberg.”