Justice Department Settles Antitrust Lawsuit Against AT&T, DirecTV

A consent judgment with restrictions on the sharing of information is being proposed that will undergo review in a 60-day comment period.
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The U.S. Department of Justice filed court papers on Thursday indicating that it has reached a deal with AT&T and DirecTV to resolve an antitrust lawsuit that accused the companies of sharing information during negotiations to carry SportsNet LA, the regional sports network holding the exclusive rights to telecast live Los Angeles Dodgers games in the L.A. area. The proposed deal contemplates future restrictions on what MVPDs are allowed to exchange with each other.

The complaint, filed in November, came on the heels of AT&T's proposed acquisition of Time Warner and accused the telecom giant's newly acquired DirecTV subsidiary of being 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 Dodgers and Time Warner Cable.

The lawsuit also noted the many Dodger fans who couldn't see telecast of games because pay television providers couldn't come to a licensing agreement.

In January, AT&T filed a motion to dismiss, arguing that no court has ever "found antitrust liability for the mere sharing of non-price information of the type alleged here," and offered an "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."

With that in the background, the DOJ's court papers filed Thursday says the parties have agreed to a consent judgment.

The government writes that no MVPD will be compelled to carry any particular video programming, including the Dodgers Channel, noting the "often contentious, high-stakes undertakings where one or both sides threatens to walk away, or even temporarily terminates the relationship ... in order to secure a better deal."

What the proposed judgment does contemplate is outlined here:

"The proposed Final Judgment broadly prohibits Defendants from sharing strategic competitive information with direct competitors and thus protects the competitive process for negotiating video programming. Specifically, Section IV ensures that Defendants will not, directly or indirectly, communicate a broad array of competitively sensitive, non-public strategic information (such as negotiating strategy, carriage plans or pricing) to any MVPD, will not request such information from any MVPD, and will not encourage or facilitate the communication of such information."

However, under the proposal, defendants are still allowed to share certain strategic information under circumstances unlikely to cause harm to competition. There are also antitrust compliance obligations. Read in full here.

The proposal is to be published in the Federal Register. A 60-day comment period will commence. All this will be happening as the Justice Department continues to review AT&T's proposed Time Warner merger on antitrust grounds.

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.