The U.S. Justice Department picked a day when baseball was on many people’s minds to sue AT&T for allegedly depriving TV viewers of access to games by colluding with competitors. The lawsuit targets DirecTV, which AT&T purchased last year for $48.5 billion. According to the Justice Department, DirecTV shared information with competitors in an effort to avoid paying carriage fees for SportsNet LA, which carries live Dodgers games. The lawsuit alleges that DirecTV talked to AT&T, Cox and Charter while all those companies were negotiating with SportsNet LA in 2014. All of the companies decided not to carry the channel.
In 2014 SportsNet LA was owned by the Los Angeles Dodgers and by Time Warner Cable. Time Warner Cable has since been acquired by Charter Communications, and is now called Spectrum. Spectrum and the Dodgers now share ownership of SportsNet LA, and the channel is carried by Charter Spectrum and Bright House Networks, which is also owned by Charter.
AT&T released a statement late yesterday, pointing out that whatever DirecTV did was done before the company was part of AT&T. Furthermore, AT&T said the companies that decided not to carry SportsNet LA were simply reacting to the extremely high carriage fees.
“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,” said AT&T general counsel David McAtee. “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 sooner AT&T can resolve this the better the company’s chances of moving forward with its plan to acquire Time Warner for $85 billion. Now that Time Warner has sold its cable business to Charter, the company no longer markets TV service directly to consumers the way AT&T and DirecTV do. AT&T is hoping that since Time Warner is not a direct competitor, the Justice Department will allow the acquisition. But AT&T will still need to allay concerns that it will give Time Warner content preferential treatment on its network. Concerns like these are carrying the day on Wall Street – Time Warner shares have traded well below AT&T’s $107.50 offer ever since the deal was announced.
image source: AP Photo/Lenny Ignelzi
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