The Department of Justice sued DirecTV, and its parent company, AT&T (T) , Wednesday for acting as the ringleader of an alleged conspiracy that ended up preventing the Los Angeles Dodgers' sportsnet from being carried in much of the team's TV market.
The lawsuit, filed in the U.S. District Court for the Central District of California, alleges that DirecTV unlawfully exchanged competitively sensitive information with Cox Communications, Charter Communications (CHTR) and AT&T during the companies' negotiations for the right to telecast Dodgers Channel, which is co-owned by the Dodgers Major League Baseball team.
The DOJ said DirecTV and its pay-TV competitors exchanged non-public information about their companies' ongoing negotiations to telecast the Dodgers Channel, as well as their companies' future plans to carry -- or not carry -- the channel in order to obtain bargaining leverage in their respective talks with SportsNet LA.
The DOJ is asking for a court order stipulating that the kinds of bilateral information sharing it says DirecTV engaged is is unlawful, that DirecTV and AT&T be permanently banned from transmitting non-public information concern their negotiating strategy with other pay-TV outfits and that the companies be required to monitor communications of executives involved in negotiations over programming carriage. The DOJ is seeking monetary compensation sufficient to cover the costs of bringing the litigation and any other relief the court deems proper.
The lawsuit against AT&T may complicate its effort to win regulatory approval for its planned $85.4 billion acquisition of Time Warner Inc. (TWX), which was announced late month. (TWX spun off cable operator TWC in 2009 and the two companies no longer have a connection.) The acquisition of TWX must be approved by the Justice Department. Typically, however, antitrust officials insist that merger reviews are little affected by unrelated civil investigations that happen to be ongoing at the time.