By Joshua Morris
Many LA Dodgers fans in Southern California have been without access to the SportsNet LA channel for the past three seasons. The Department of Justice alleges the inaccessibility is due to DirecTV’s unlawful orchestration with competitors to obtain a bargaining advantage in their parallel negotiations to carry the channel. Time Warner Cable distributes the channel and the LA Dodgers hold the rights to SportsNet LA, which has exclusive rights to telecast a large majority of live Dodgers games in the Los Angeles area. The DOJ alleges that DirecTV, Cox, Charter, and AT&T secretly executed unlawful information sharing agreements that were a material factor in the companies’ decisions to not carry the channel. They further allege that these agreements unlawfully deprived consumers of a fair and competitive process.
In early 2014, Time Warner Cable (TWC) offered various companies, including DirecTV, an opportunity to purchase a license to telecast the Dodgers Channel to their Los Angeles customers. The DOJ alleges that instead of negotiating independently, DirecTV and the other companies engaged in unlawful information exchanges with their competitors. They further allege that the information exchange was to artificially enhance bargaining advantage and force TWC to accept their terms and price. Additionally, the DOJ alleges DirecTV, Cox, Charter, and AT&T colluded to reduce fears that one of the participating competitors in the parallel negotiations would carry the channel, potentially resulting in a loss of customers to the carrying competitor.
Similar to TWC’s acquisition of the Dodgers channel, TWC acquired the rights to locally telecast the LA Lakers games, in 2011. Subsequently, DirecTV declined to carry the Lakers channel claiming that TWC’s asking price was too high. TWC increased competitive pressure on DirecTV by offering the Lakers channel to DirecTV’s smaller competitors for the favorable price a larger distributor would have received. The DOJ hypothesizes that DirecTV’s collusion in the LA Dodgers channel negotiations was an unlawful attempt to gain leverage and avoid a situation similar to the Lakers channel negotiations, where they are compelled to carry content at an undesirably high price to acquire the competitive content.
If the court finds DirecTV and the other cable companies have actually employed these anticompetitive measures, in violation of the Sherman Act, and deprived customers of content, it could result in expensive government mandated internal monitoring of the involved companies, mandated company compliance programs, unannounced government monitoring, fines, and potentially prison time for the executives. In the days of Netflix, it is no secret that cable companies are facing growing pressures to increase the amount of content while keeping prices down. Many households are cutting the chord and switching to low cost services like Netflix and Hulu.
Considering the rising costs of premium content and the desire to keep costs low, what is to prevent competitors from executing similar unlawful agreements and efforts? In the face of rising market pressures for cable companies, is this type of anticompetitive conduct more prevalent than we think? If DirecTV and the other major cable companies are found to have colluded in an attempt to affect market prices, in violation of the Sherman Act, this could result in increased government scrutiny of the dealings of cable companies and content providers.
 Bill Shaikin, DirecTV rejects latest attempt to restart SportsNet LA talks, The Wall Street Journal (Apr. 29, 2016), https://www.latimes.com/sports/dodgers/la-sp-dn-directv-dodgers-time-warner-20160429-story.html.
 Department of Justice Office of Public Affairs, Justice Department Sues DIRECTV for Orchestrating Information Sharing Agreements with Three Competitors: Unlawful Information Sharing Contributed to Blackout that Deprived Many Fans of Opportunity to Watch Los Angeles Dodgers on TV for Last 3 Seasons, United States Department of Justice (Nov. 2, 2016), https://www.justice.gov/opa/pr/justice-department-sues-directv-orchestrating-information-sharing-agreements-three.
 Brent Kendall and Joe Flint, U.S. Sues AT&T’s DirecTV for Collusion During Dodgers TV Talks, The Wall Street Journal (Nov. 2, 2016), https://www.wsj.com/articles/BT-CO-20161102-710719.
 United States v. DirecTV Group Holdings, Department of Justice (Nov 2. 2016), https://www.justice.gov/opa/press-release/file/907636/download.
 Id. at 3.
 Id. at 4, 6.
 Id. at 4.
 Id. at 4.
 Id. at 15
 Id. at 16.
 Id. at 18.
 Steven M. Kowal and Lauren Norris Donahue, The Burden of Corporate Probation May Follow an Antitrust Conviction, K&L Gates U.S. Antitrust, Competition, & Trade Regulation Alert (Sept. 22, 2014), https://www.klgates.com/the-burden-of-corporate-probation-may-follow-an-antitrust-conviction-09-22-2014/.
 Yoni Heisler, Cable providers still have no answer for Netflix as cord-cutting accelerates, BGR (Dec. 11, 2015), https://bgr.com/2015/12/11/cable-tv-decline-cord-cutting/.