AT&T/DirecTV settle Justice Department lawsuit over Dodgers’ channel collusion

Word came down a few weeks ago that AT&T and subsidiary DirecTV were close to settling the Justice Department’s lawsuit against them, and that settlement is now official. Notably, the settlement doesn’t require AT&T/DirecTV to add TimeWarner Cable’s Dodgers channel SportsNet LA, which was at the heart of this issue.

The Justice Department sued AT&T over this last November, alleging that DirecTV executives led a campaign to make sure other providers (AT&T, which didn’t own DirecTV then, plus Cox and Charter) also wouldn’t pick up the channel in 2013 and 2014. They alleged that Dodgers’ fans “were denied a fair competitive process” thanks to DirecTV exchanging confidential information with direct competitors. Interestingly enough, the settlement doesn’t require AT&T/DirecTV to offer the Dodgers’ channel, but it does prohibit them from exchanging this sort of information again:

The settlement does not require any pay-TV company to carry the Dodgers channel but does require DirecTV to refrain from swapping competitively sensitive information with rivals, according to a court filing.

Under the settlement, the companies must also monitor some communications that their executives have with competitors and to implement compliance programs.

It probably makes sense for AT&T to settle this lawsuit, especially as the Justice Department is currently scrutinizing their planned purchase of Time Warner Inc. (which does not include TimeWarner Cable, which Charter bought last year). Outstanding litigation against them might have hurt that acquisition. And this settlement doesn’t require AT&T Uverse or DirecTV to pick up SportsNet LA, so they didn’t have to give in there. Meanwhile, the Justice Department also got at least part of what they wanted; some prevention against this sort of alleged collusion happening in the future.

The “settlement promotes competition among pay-television providers and prevents AT&T and DIRECTV from engaging in illegal conduct that thwarts the competitive process,” said acting Assistant Attorney General Brent Snyder of the Justice Department.

However, while there are some steps here to prohibit that kind of behavior from happening again (most notably, the compliance programs and communications monitoring), a big part of the issue here was how blatantly DirecTV executives discussed this. In fact, the Justice Department’s complaint cited “then-DirecTV CEO Mike White’s public comments in a May 2014 industry conference that it was important that ‘distributors start to stand together, like most of us have been doing in Los Angeles for the first time ever, by the way, with the Dodgers on outrageous increases and excesses.'” So, this was a really easy target. More subtle comments and exchanges of information may be harder to stop.

The other takeaway here is that this settlement will not, in and of itself, create any more coverage for the beleaguered SportsNet LA. Of course, the Justice Department didn’t ask for that, but some figured a settlement might involve AT&T/DirecTV agreeing to pick up the channel. That hasn’t happened. They certainly could still add it, and maybe they will now there isn’t litigation over it, but there’s no pressure on them to do so now. So, it may still be quite hard for fans in Los Angeles to watch the Dodgers this year.

[Reuters]