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Why the Justice Department Is Suing DirecTV Over Talks for Showing Los Angeles Dodgers Games

November 2, 2016

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Pitcher Clayton Kershaw #22 of the Los Angeles Dodgers delivers a pitch in the second inning against the Philadelphia Phillies at Citizens Bank Park on May 23, 2014 in Philadelphia, Pennsylvania. Photograph by Drew Hallowell — Getty Images

The U.S. Justice Department filed a lawsuit on Wednesday against DirecTV, alleging the company acted as a ringleader to unlawfully swap information with rival pay-TV companies during negotiations over whether to show Dodgers baseball games in the Los Angeles area.

The department said DirecTV, now owned by AT&T, swapped information with Cox Communications, Charter Communications (CHTR), and AT&T (T), to win bargaining leverage against Time Warner Cable, which distributes a channel showing Dodgers games in Los Angeles.

These companies have refused to carry the channel, contending that carriage fees sought by Time Warner Cable (TWC) were too high. As a result, much of Los Angeles was unable to watch the Dodgers play for the past three seasons, the Justice Department said.

The lawsuit comes at a time when AT&T, which purchased DirecTV last year, is preparing for an antitrust review of its planned purchase of Time Warner. The Justice Department is expected to scrutinize the deal.

The department said in the complaint that a DirecTV executive exchanged non-public information with executives at Cox, Charter and AT&T in early 2013 about the status of their negotiations with Time Warner Cable.

The complaint names DirecTV and its owner AT&T as defendant, but not Cox or Charter.

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“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,” Justice Department lawyer Jonathan Sallet said in a statement.

AT&T said the information trades occurred before its DirecTV acquisition, and said it disagreed with the department’s action.

“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,” said David McAtee, AT&T general counsel, in a statement.

“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,” McAtee said.

Charter, which completed its takeover of Time Warner Cable earlier this year, and Cox did not immediately respond to a request for comment.