AT&T and DirecTV facing legal threat over information sharing

David McAtee

David McAtee

The US Department of Justice is taking legal action against DirecTV and its new owner AT&T “for acting as the ringleader of a series of unlawful information exchanges between DirecTV and three of its competitors”.

The action relates to negotiations with SportsNet LA, holder of exclusive broadcasting rights to the games of baseball team the LA Dodgers, that led to none of the three companies striking a deal to carry The Dodgers Channel. SportsNet LA was jointly owned by the LA Dodgers and Time Warner Cable, which was acquired by Charter Communications earlier this year.

The DoJ alleges that DirecTV shared information illegally with Cox Communications and Charter Communications – the now part owner of the channel – as well as with AT&T – now owner of DirecTV – over their carriage talks with SportsNet LA for its channel.

Specifically, the DoJ says that the companies illegally exchanged information about their ongoing negotiations and plans to carry or not carry the channel, as well as working with each other to reduce the risk that one or other would lose subscribers if they decided not to carry the channel.

“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.”

AT&T has denied the charges, saying that the decision not to carry the channel was based on the inflated prices demanded at the time by Time Warner Cable.

“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,” said David McAtee, AT&T General Counsel.

The challenge comes at a sensitive time for the telco giant, which is in the process of attempting to acquire Time Warner for US$85.4 billion. The deal faces close regulatory scrutiny over the coming months.