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Justice Department Sues AT&T-DirecTV Over Blocking Dodgers Channel

In a move that could shake up the three-year-old stalemate over carriage of L.A. Dodgers games, the U.S. Department of Justice filed an antitrust suit on Wednesday accusing DirecTV of colluding with competitors in negotiations with Time Warner Cable.

The suit alleges that DirecTV shared non-public information with Cox, Charter, and AT&T, strengthening its bargaining position in carriage talks. Time Warner Cable, which recently merged with Charter Communications and now goes by Spectrum, has exclusive rights to distribute SportsNet LA, the channel that carries Dodgers games.

But the company has been unable to sell those rights to DirecTV and other carriers, leaving more than half of Southern California households without access to Dodgers games.

In its filing, the Justice Department alleges that DirecTV — now owned by AT&T, which was named as the defendant — acted as a ringleader, keeping its competitors apprised of its position in negotiations with TWC. Daniel York, DirecTV’s chief content officer, “assured his counterparts at Cox, Charter, and AT&T that DIRECTV would not be launching the Dodgers Channel any time soon and received similar assurances,” according to the complaint. DirecTV CEO Mike White boasted at an industry conference that distributors were “start[ing] to stand together” against “outrageous increases and excesses,” the filing states.

“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,” Jonathan Sallet, deputy assistant attorney general in the DOJ’s Antitrust Division, said in a statement.

AT&T, speaking on behalf of DirecTV, said it would fight back against the government’s claims.

“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,” David McAtee, AT&T’s general counsel, 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.”

Charter Communications, on behalf of Time Warner Cable, declined to comment.

Consumer Watchdog, a consumer advocacy group, has been sharply critical of the Dodgers and of Time Warner Cable in their handling of the carriage dispute. But the group’s president, Jamie Court, said he welcomed the antitrust action against DirecTV.

“It may have been to try to get a better price, but the collusive conduct is wrong,” Court said. “If each company acted independently and competitively as they claim they do, we probably would have had a resolution a long time ago. … The Justice Department is absolutely right in exposing this and going to court.”

One key player in the dispute has switched sides since the stalemate began in early 2014. Charter Communications is alleged to have participated in the collusive activity with DirecTV. According to the complaint, a Charter executive spoke with York, and a day later recommended to the CEO that the company “sit … out until at least if and when Direct does a deal.”

Charter’s interests changed, however, when it agreed to merge with Time Warner Cable in 2015. At that time, Charter agreed to carry SportsNet LA, and Charter now stands to benefit from breaking the deadlock and concluding a deal with DirecTV, Cox, and AT&T. The complaint references numerous conversations, text messages and voicemails between DirecTV’s York and a Charter executive. The complaint cites the Charter executive as speaking in “coded language” to York regarding an earlier negotiation with Hulu, quoting him as saying that “a little birdie” had told him of DirecTV’s plans.

According to the complaint, Charter consistently told Time Warner Cable that it would not carry the Dodgers channel unless DirecTV did so first. Charter is not named as a defendant in the antitrust suit.

Court suggested that the DOJ action could spell trouble for AT&T’s plans to acquire Time Warner — which is not affiliated with Time Warner Cable.

“When you have a few big companies, they share data and talk to each other as a way of raising prices and limiting choice,” Court said.

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