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In baseball, there are certain acts that are unsportsmanlike but not strictly verboten. An example would be attempts by one team to steal the other’s secret signs indicating what pitches will be thrown.
In November, the Justice Department called out AT&T for something analogous. In an antitrust lawsuit, the government claimed that DirecTV and its parent AT&T coordinated information-sharing among rivals including Charter and Cox so as to have a better handle on SportsNet LA, the regional sports network co-owned by Time Warner Cable holding the exclusive rights to telecast live Los Angeles Dodgers games in the L.A. area. As a result, the government alleged that the cable companies artificially enhanced their bargaining leverage and fans of the team were deprived of a fair competitive process that would have resulted in wider distribution of televised Dodgers games.
But is information-sharing among competitors really illegal? Or is this like stealing signs where there’s technically nothing in the rulebook preventing such activity?
In court papers filed on Tuesday, AT&T argues the latter.
“Antitrust challenges based solely on alleged agreements to ‘share information’ are extremely rare, and for good reason,” states AT&T’s memorandum in support of dismissing the government’s lawsuit. “Never before has a court found antitrust liability for the mere sharing of non-price information of the type alleged here, especially when based on such threadbare allegations of an agreement.”
Moreover, argues AT&T, “there is nothing in the complaint that contradicts the obvious alternative explanation that DirecTV and other distributors independently analyzed the value of the Dodgers channel to their subscribers, tried to negotiate reasonable terms with TWC in good faith, and reached the same fundamental conclusion that TWC’s price demands were too high.”
AT&T acknowledges the allegations being made — that TWC was demanding other cable operators pay $5 a month per subscriber for the rights to carry SportsNet LA on their systems; that distributors were worried about the rising cost of sports content; and that the companies negotiating separately came to agreements with each other to share information.
The defendant takes some issue with the presentation of allegations.
“There is no direct evidence that most of the alleged communications involved the Dodgers negotiations,” states AT&T. “In a year-long investigation, the government identified only three such conversations that even mention the Dodgers negotiations explicitly — two involving Cox, one involving Charter, and none involving AT&T. And the government does not allege that any of these alleged conversations included reference to specific information about the price or terms of counteroffers or about negotiating strategy.”
But AT&T mostly focuses on what the government doesn’t allege.
The telecom giant says there’s no allegation of a document that spells out the terms of the alleged agreement, no allegation that the negotiation over a Dodgers TV deal didn’t happen in good faith, no allegation of communication with Verizon or Dish (two other MVPDs), no allegation of market power and, last but not least, no allegation that any distributor would have carried the Dodgers channel “but for” the information sharing.
Represented by attorney M. Sean Royall at Gibson Dunn, AT&T argues that the government simply hasn’t shown the elements comprising a proper antitrust complaint. Will the judge agree?
Disclosure: The Hollywood Reporter is owned by Eldridge Industries, an entity controlled by executive Todd Boehly, who also has an ownership stake in the Los Angeles Dodgers franchise.
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