AT&T, which acquired DirecTV in 2014, has been implicated in an antitrust lawsuit filed by the U.S. Justice Department on Wednesday against the broadcast satellite service provider. The complaint alleged that DirecTV unlawfully shared information with pay-TV competitors Cox and Charter Communications to keep the Dodgers games from being aired in Los Angeles.
According to the Justice Department, the companies colluded about their plans of whether they should carry Dodgers-owned SportsNet LA in order to gain bargaining advantage. The department accused DirecTV as the "ringleader" in the collusion that led to the companies' decision to resist carrying the channel, cutting off live Dodgers games from millions of Los Angeles homes. The complaint also lamented that the sharing of non-public information between AT&T, Cox and Charter "corrupted" their negotiations with Time Warner Cable about carrying SportsNet LA. Time Warner Cable, a separate company from Time Warner, owns the exclusive rights to distribute the LA-area sports channel.
More specifically, the Justice Department accused Daniel York, DirecTV's chief content officer, of orchestrating the information-sharing so as to assure the company's rivals that DirecTV won't air the Dodgers channel. In return, the rivals gave the same assurance to York so that the three companies did not have to worry about losing subscribers if a competitor launched the games. Although AT&T only completed the DirecTV acquisition in July 2015, the complaint named the carrier as the defendant for its new role as the satellite-TV provider's parent company. The lawsuit asks the U.S. District Court for the Central District of California to bar AT&T and DirecTV from sharing non-public information on any negotiations with TV programming providers. The department also wants the court to require AT&T to submit regular reports to the government about its communications with competitors.
In a rebuttal statement, AT&T denied the allegations made by the Justice Department and argued that pay-TV distributors refused to carry the Dodgers-owned channel because of the excessive carriage fees sought by Time Warner Cable. While the case has nothing to do with AT&T's plan to acquire Time Warner for $85 billion, the lawsuit puts the deal in a negative light as it is bound for review and approval by the Justice Department.