RSN Antitrust Claim Against AT&T Seen Facing Difficult Road
It could be tough to prove an MVPD's antitrust claims that AT&T is giving itself a back-door deal on Houston Astros, Houston Rockets and other sports content through its regional sports network that boxes out rival MVPDs, antitrust experts told us. A suit, as AT&T is trying to buy Time Warner, might be aimed more at trying to influence DOJ condition for deal approval on consent decree terms covering RSNs, said an antitrust expert.
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En-Touch in 2015 brought up similar complaints about the RSN to the FCC when the agency was reviewing AT&T's proposed buy of DirecTV. Now, with the DOJ trying to stop AT&T/TW (see 1711210005), is a good time to bring up what clearly has been a festering issue, the antitrust expert said.
The expiration of En-Touch's contract to carry AT&T SportsNet Southwest content "presented a Hobson's choice" of either paying exorbitantly high prices or losing subscribers when the must-see RSN content leaves its lineup, the company said in its suit (in Pacer), filed Tuesday in U.S. District Court in Los Angeles. The suit alleges AT&T Clayton Act, Sherman Act and California law violations. AT&T didn't comment Wednesday.
En-Touch could be hard pressed to prove collusion, since it would have to show RSN AT&T SportsNet Southwest is a separate entity from AT&T and its DirecTV, said Pepperdine School of Law associate professor Babette Boliek. The En-Touch complaint also has to overcome that AT&T is arguably within its rights to refuse to sell.
To prevail on the Sherman Act claim, En-Touch needs to show that a distinct Houston cable subscription market exists, that AT&T actions had an anti-competitive effect there, and that effect outweighed any pro-competitive effects, said Paynter Law's Stuart Paynter. "Antitrust cases that are not simple price-fixing cases are inherently hard to prove." He said AT&T might seek to have the case thrown out during discovery on the grounds the complaint doesn't contain very detailed allegations about why the "Houston cable subscription market" is a distinct market.
Its Sherman Act claim "seems weak," since the 26 percent market share in the Houston area claimed by AT&T and DirecTV generally isn't considered a monopoly, Paynter said. Trying to gain monopoly power also can violate antitrust laws, but that's "always a tough claim" since it requires showing specific intent to monopolize and a "dangerous probability" of achieving that, he said.
AT&T's contract structure mirrors how the RSN operated when it was Comcast-owned Comcast SportsNet Houston (CSN Houston), En-Touch said. Comcast for a time was the only major MVPD to carry Rockets and Astros games in the Houston market because of the subscriber rate CSN Houston charged, resulting in "a backdoor deal between a parent and a subsidiary," it said, saying DirecTV was critical then of what CSN Houston was charging. AT&T and DirecTV jointly bought CSN Houston out of bankruptcy in 2014 but kept the pricing structure, En-Touch said.