WASHINGTON?The Justice Department filed an antitrust lawsuit Wednesday against AT&T Inc.'s DirecTV, alleging that it engaged in unlawful information-sharing with rival pay-TV operators during negotiations over whether to carry a Los Angeles-area sports channel owned by the Dodgers baseball team.
The lawsuit inserts the government into a contentious dispute over SportsNet LA, a channel launched in 2014 to carry Dodgers games. The team owns the network but Time Warner Cable distributes it, thanks to a blockbuster 25-year deal that Major League Baseball has valued at $8.35 billion.
Most pay-TV distributors have refused to carry the channel, saying the carriage fees sought by Time Warner Cable were too high.
That standoff has meant that millions of Los Angeles-area television viewers have been unable to watch Dodgers baseball, an issue of particular consternation for fans in 2016 because it was the last season for legendary team broadcaster Vin Scully.
The Justice Department lawsuit, filed in a Los Angeles federal court, alleges DirecTV was the "ringleader" of information-sharing agreements with three then-rivals?AT&T, Cox Communications and Charter Communications?that "corrupted" the pay-TV operators' negotiations with Time Warner about carrying the Dodgers channel.
Complicating the case, AT&T Inc. acquired DirecTV last year, while Time Warner Cable was purchased this year by Charter.
This information-sharing was intended to givethe operators increased leverage as they bargained with TWC, the department alleged.
"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.
Complicating the case, AT&T Inc. acquired DirecTV last year, while Time Warner Cable was purchased this year by Charter. AT&T is named as a defendant in the case along with DirecTV, though Cox and Charter aren't.
AT&T said in a statement, "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."
Cox said in a statement that "we are gratified that we were not named as a defendant. We continue to be committed to making independent decisions on program content."
A Charter spokesperson declined to comment. The Dodgers didn't immediately respond to a request for comment.
The Justice Department lawsuit is separate from an expected lengthy antitrust review by the government of AT&T's proposed $85.4 billion deal to acquire entertainment giant Time Warner Inc., a company that is a separate entity from Time Warner Cable. But the case could add to criticisms that a post-acquisition AT&T would be too powerful a gatekeeper that would favor its own content over that of other companies.
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(END) Dow Jones Newswires
November 02, 2016 13:45 ET (17:45 GMT)
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