Business & Economy

Justice Department sues AT&T-DirecTV for allegedly orchestrating Dodgers Channel blackout

Justin Turner #10 of the Los Angeles Dodgers reacts after striking out in the ninth inning against the St. Louis Cardinals in Game Four of the National League Divison Series at Busch Stadium on Oct. 7, 2014 in St Louis, Missouri.
Justin Turner #10 of the Los Angeles Dodgers reacts after striking out in the ninth inning against the St. Louis Cardinals in Game Four of the National League Divison Series at Busch Stadium on Oct. 7, 2014 in St Louis, Missouri.
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The U.S. Department of Justice filed a lawsuit Wednesday alleging that AT&T-owned DirecTV orchestrated unlawful information exchanges with three of its competitors that resulted in the companies’ decisions to not carry the Dodgers Channel, the Justice Department said in a statement.

The Justice Department alleges that DirecTV unlawfully exchanged competitively-sensitive information with Cox, Charter and AT&T about the companies’ ongoing negotiations to telecast the Dodgers through SportsNet LA, who holds exclusive telecast rights for live Dodgers games, and whether they would carry the channel in the future. The discussions allegedly enabled the companies to obtain bargaining leverage and reduce the risk that they would lose subscribers if they did not broadcast the Dodgers Channel but a competitor did.

“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 Deputy Assistant Attorney General Jonathan Sallet of the Justice Department’s Antitrust Division in a statement.  “Competition, not collusion, best serves consumers and that is especially true when, as with pay-television providers, consumers have only a handful of choices in the marketplace.”

The Dodgers Channel is still not carried by DirecTV, Cox or AT&T.

"The facts that are in this suit —if the facts are accurate —[show] that there was collusion," Wall Street Journal media reporter Joe Flint told KPCC's AirTalk. “It’s a very interesting suit because basically, from reading it, one can gather that Cox and Charter cooperated with the Justice Department on this. ... It doesn’t exactly look good for DirecTV, and Game 7 of the World Series timing aside, there’s something even bigger at stake, because critics of AT&T’s potential deal to acquire Time Warner — the entertainment company, not the cable company — will point to this suit as an example of why this deal shouldn’t happen.”

Flint noted that both Bernie Sanders and Donald Trump have said that the merger is a bad deal.

“[The DOJ is] stepping into this with a designated goal and that goal is to send a message, both instantly to the various cable providers in this particular case, and I think, to a larger picture of the larger deal that is going down with AT&T and Time Warner. This a deal that is opposed across the political spectrum by some pretty heavy hitters," Flint said.

AT&T responded to the suit Wednesday, saying their decision as based solely on the channel's high cost.  

“We respect the DOJ’s important role in protecting consumers, but in this case, which occurred before AT&T’s acquisition of DirecTV, we see the facts differently,” AT&T general counsel David McAtee 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.”

The investigation appears to be one that's been underway for some time.

“I think that the Justice Department has been looking for this for a while," Deadline Senior Editor Dominic Patten told AirTalk. "Certainly L.A. Dodgers fans have been annoyed at this for a while."

For their part, the Dodgers weighed in to say they hope the Justice Department's suit results in more fans being able to see their games on television.

"The allegations against DirecTV in today's complaint by the U.S. Justice Department are shocking but not surprising," Dodgers president/CEO Stan Kasten said in a statement. "We hope today's action leads to all Dodger fans finally being able to view all Dodger games everywhere in the market."

AT&T declined a request for an interview with KPCC.

You can read the full complaint below: 

Document: Justice Department Complaint vs DIRECTV

This story has been updated.