NEW YORK (TheStreet) -- The DOJ is suing AT&T (T) and its satellite TV provider DirecTV for colluding with rival pay-TV competitors Cox Communications, and Charter Communications to keep from carrying Los Angeles sports network SportsNet L.A. This is said to have taken place prior to AT&T's acquisition of DirecTV, which was completed in July of last year.
The 57-page lawsuit that was filed in a federal L.A. court accuses the four companies of illegal conduct, including sharing nonpublic information among each other in order to secure leverage in negotiations with cable provider Time Warner (TWX), the Los Angeles Times reported. Time Warner was responsible for recruiting other pay-TV companies to carry SportsNet L.A.
AT&T announced its intention to acquire Time Warner on October 22, 2016 for $85 billion.
Former FCC advisor Adonis Hoffman appeared on Thursday afternoon's "Closing Bell" on CNBC to discuss what impact, if any, this lawsuit will have on the AT&T, Time Warner merger.
"This lawsuit really points out some of the long standing problems we've seen with carriage agreements," Hoffman said. "These agreements are fiercely negotiated, they're often the source of great lawsuits. Rarely does the Department of Justice jump into these kinds of disputes."
Hoffman is "troubled" by the fact that the DOJ has decided to weigh in on this issue, which he says should be the subject of private negotiations. Hoffman believes the DOJ's involvement sets a "dangerous precedent" and the parties should figure this out on their own.