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Justice Department Suing AT&T for Antitrust Collusion Over Dodgers Sports Channel

Phillip Dampier November 2, 2016 AT&T, Charter Spectrum, Competition, Cox, DirecTV, Public Policy & Gov't, TWC (see Charter) 1 Comment

spectrum-sportsnetWhile AT&T argues its blockbuster merger with Time Warner, Inc., will not represent an increased risk of media consolidation and antitrust abuse, that same phone company is now facing time in court to answer a lawsuit filed today by the Justice Department accusing AT&T of unlawful collusion with cable operators over the pricing of a Southern California regional sports channel.

DirecTV — now owned by AT&T — is accused of being the ringleader of an illegal “information-sharing” scheme that traded confidential information between the satellite provider, AT&T, Cox Communications, and Charter Communications regarding carriage contract negotiations between SportsNet LA (now known as Spectrum SportsNet) and competing pay television companies.

SportsNet LA has been in the news since its launch. Owned by the Los Angeles Dodgers and initially distributed by Time Warner Cable, SportsNet LA was rejected by most of its pay TV rivals after they balked over the asking price.

att directvNow the Justice Department is accusing DirecTV of a secretly coordinating the sharing of confidential information between the area’s cable operators and AT&T that “corrupted” negotiations with Time Warner Cable over the price to carry the channel.

With all of Southern California’s major cable companies and AT&T allegedly colluding with DirecTV, the providers could create a united front to demand a better price and terms for the sports channel. In the end, it didn’t work and Charter, Time Warner Cable’s new owner, remains the largest operator in the region to carry the network. Critics suggest Charter changed its mind about carrying the channel only to remove it as a potential issue in its merger with the larger Time Warner Cable.

“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 Justice Department lawyer Jonathan Sallet.

justiceThe Justice Department brought the case exclusively against DirecTV’s parent company — AT&T.

Cox was relieved not to be sued.

“We are gratified that we were not named as a defendant. We continue to be committed to making independent decisions on program content,” a Cox spokesperson said in a statement. Charter has refused to comment.

For now, AT&T plans a robust defense in court.

“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,” AT&T said in a statement. “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.”

But the case highlights critics’ concerns that allowing AT&T to grow even larger with the acquisition of Time Warner, Inc., only increases the chances of more alleged antitrust violations and collusion between players in the increasingly concentrated pay television market. Since SportsNet LA launched in 2014, Charter Communications has merged with Time Warner Cable — changing the name of the sports channel to Spectrum SportsNet, Verizon Communications has sold its FiOS network to Frontier Communications, which already provides service in parts of California, and AT&T has purchased DirecTV outright. Only Cox remains untouched by the recent wave of consolidation, although many analysts expect a takeover bid from Altice USA sometime in 2017.

Currently there is 1 comment on this Article:

  1. LG says:

    If they don’t block the merger, then congressmen need to go to jail. This is getting ridiculous. How big does the former telephone behemoth have to get before de-monopolization takes place? They are now bigger than Bell before the first de-mopoly, and this merger deal shouldn’t even be on the table. AT&T should be in front of the senate, as well as the department for monopoly. All of this started with Reagan’s de-regulation. Free market’s need regulation. It’s like having a baseball game without an umpire to call fair / foul. Game devolves into arguments and fights before too long.







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