10:33am PT by Eriq Gardner
Justice Department Targets AT&T, DirecTV in Antitrust Lawsuit Over L.A. Dodgers TV Negotiations
The U.S. Justice Department filed an antitrust lawsuit on Wednesday against DirecTV and parent company AT&T over the alleged way that information was shared between cable and satellite rivals during negotiations to carry SportsNet LA, the regional sports network holding the exclusive rights to telecast live Dodgers games in the Los Angeles area.
"For almost 60 years, the Los Angeles Dodgers have been a beloved professional sports team in Los Angeles," opens the complaint. "During this time, LA Dodgers fans have seen their team win five World Series championships, closely followed the Hall of Fame careers of baseball greats such as Sandy Koufax and Tommy Lasorda, and listened to the play-by-play calls of broadcast legend Vin Scully. But 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 concerning carrying Dodgers games."
The complaint alleges that DirecTV was the "ringleader of information sharing agreements" with Cox Communications Inc., Charter Communications Inc. and AT&T as the rivals negotiated carriage of SportsNet LA, co-owned by the Los Angeles Dodgers and Time Warner Cable.
The pay TV providers allegedly shared nonpublic information with each other so as "to reduce each rival’s fear that competitors would carry the Dodgers Channel, thereby providing DIRECTV and its competitors artificially enhanced bargaining leverage to force TWC to accept their terms."
The Justice Department is demanding a permanent injunction on the objectionable activity plus an order requiring defendants to monitor communications and periodically report this to the government. Training and compliance programs for executives are also requested as well as further relief.
The lawsuit comes just as AT&T is to submit its $85 billion proposed acquisition of Time Warner to antitrust regulators at the Justice Department. The filing is already being interpreted by some as a "red flag" against the merger and evidence that merger conditions may not sufficiently curb antitrust activity.
In a statement, AT&T gave its reaction to the DOJ's action:
"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.”
Disclosure: The Hollywood Reporter is owned by Eldridge Industries, an entity controlled by executive Todd Boehly, who also has an ownership stake in the L.A. Dodgers franchise.