Justice Department Sues AT&T, DirecTV

by Paige Albiniak  |  11.02.2016

Just after AT&T announced it was buying entertainment mega-corporation Time Warner, the U.S. Department of Justice on Wednesday said it was suing AT&T and its subsidiary DirecTV. The case alleges that AT&T and DirecTV “orchestrated an illegal campaign to block wide carriage of the television channel owned by the Los Angeles Dodgers,” reports the Los Angeles Times

“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 in a statement. “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.”

According to the Department of Justice’s case, DirecTV worked to make sure that other pay-TV companies in Los Angeles — specifically Cox Communications, Charter Communications and AT&T when it did not own DirecTV — would not carry SportsNet LA, a TV channel controlled by Los Angeles Dodgers’ owner Guggenheim Baseball Management.

For its part, DirecTV says the reason none of the companies agreed to carry the channel was that it was too expensive at $5 per subscriber.

“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 L.A. Dodgers baseball,” said AT&T General Counsel David McAtee, according to the LA Times. “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.”

The Justice Department is now demanding injunctive relief, which could include its monitoring of content negotiations in the pay-TV industry. It did not require DirecTV to carry SportsNet LA, but that could still become a part of a future settlement.

Read the complaint against AT&T, DirecTV

Consumer advocates in Washington, D.C., immediately pointed to the lawsuit as evidence that should AT&T’s $85.4 billion acquisition of Time Warner go through, the resulting company will have too much power.

Matt Wood, policy director of digital-rights group Free Press, told the LA Times that the suit “shows the danger of concentrating too much media power in too few hands.”

“Although thorough enforcement uncovered evidence of wrongdoing in this instance, we should not allow further consolidation that invites this type of behavior across the entire market,” said John Bergmayer, senior counsel at Public Knowledge, another digital-rights group, in a statement. “This case raises obvious concerns about whether AT&T would have the incentive and ability to harm consumers if it were permitted to acquire Time Warner.”

READ MORE: The Los Angeles Times, Broadcasting & Cable

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