DOJ Sues DirecTV over Dodgers Negotiations

The Department of Justice sued DirecTV and its parent company AT&T over alleged unlawful information exchanges between DirecTV and three of its competitors – Cox, Charter, and AT&T – during the companies’ negotiations to carry SportsNet LA, which holds the exclusive rights to telecast almost all live Dodgers games in the Los Angeles area.

The lawsuit, filed in the U.S. District Court for the Central District of California, alleges that DirecTV and each of these competitors agreed to and did exchange non-public information about their companies’ ongoing negotiations to telecast the Dodgers Channel, as well as their companies’ future plans with the channel. The complaint also alleges that the companies engaged in this conduct in order to obtain bargaining leverage and to reduce the risk that they would lose subscribers if they decided not to carry the channel but a competitor chose to do so. The complaint further alleges that the information learned through these unlawful agreements was a material factor in the companies’ decisions not to carry the Dodgers Channel. The Dodgers Channel is still not carried by DirecTV, Cox or AT&T.

“As the complaint explains, 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,” said Deputy Assistant Attorney General Jonathan Sallet of the Justice Department’s Antitrust Division. “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.”

Here’s the statement from David McAtee, AT&T General Counsel: “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.”