The United States Justice Department filed an antitrust suit against DirecTV and its corporate sponsor, AT&T, today. The suit alleges that Directv colluded with its competitors in the Los Angeles market to illegally hedge its bets on not carrying Sportsnet LA, the channel that exclusively broadcasts the vast majority of Los Angeles Dodgers games.
Justice Department Sues Directv for Collusion
The suit states that DirecTV shared information about its private negotiations to potentially carry Sportsnet LA with its main competitors in the Los Angeles market, Charter and Cox. The aim of the information sharing, according to the suit, was to ascertain the likelihood that its competitors would carry the channel and thus insure itself against losing subscribers should it opt to not carry the channel. None of the three companies named in the suit have reached an agreement to carry Sportsnet LA as of the time of this article.
Charter and Cox are not named as defendants in the suit, but company documents and/or officials could receive subpoenas as part of the trial.
Potential Results of the Antitrust Claim
Dodgers fans shouldn’t think that the Justice Department has swooped in to give them better availability for live television broadcasts of their favorite team’s games, however.
Not much could change about the current situation. Even if the Justice Department’s suit is successful, Sportsnet LA will still has the exclusive rights to broadcast the games, so any fan living in the Los Angeles market will still have to watch the games on that channel. In order for fans to watch the games, they will still need to subscribe to a carrier of Sportsnet LA.
The Justice Department has no authority to force Charter, Cox, or AT&T/DirecTV to carry Sportsnet LA. This case is different from the antitrust suit against MLB.TV, which MLB Advanced Media settled by agreeing to change the terms of its service. That suit alleged that MLBAM used its monopoly to force consumers to buy the entire MLB.TV package, restricting consumer choice in viewing baseball games.
DirecTV did not have a monopoly in the Los Angeles market, and there was nothing illegal about its decision to not carry Sportsnet LA. The suit brought against AT&T/DirecTV isn’t about the decision to not carry Sportsnet LA and thus keep its customers from being able to watch Dodgers games. It’s about the illegal sharing of information with competitors that created a sort of “pseudo-monopoly” and limited consumers’ options, as many subscribers were locked into contracts that carried substantial penalties for early cancellation.
Consumers as Executioners
If the Justice Department is successful, there will most likely be fines for AT&T/DirecTV. Ultimately, the consumer in the Los Angeles market actually has the most punitive power over AT&T/DirecTV, and that could be more serious for any cable/satellite company than a fine.
The negative press over the suit, and everything the trial reveals, could sway many current subscribers toward canceling when their contracts run out and potential subscribers toward choosing another company.
In the end, the very thing that DirecTV feared may be exactly what ends up happening: the loss of subscribers over the decision not to carry Sportsnet LA.
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