The U.S. Justice Department on Thursday settled its lawsuit with AT&T, resolving claims that a high-level DirecTV executive illegally colluded with other pay-TV companies in Southern California to block the rollout of the Los Angeles Dodgers' cable sports channel in 2014.
As part of the proposed settlement, AT&T pledged to monitor its employees so they do not illegally share information about sensitive contract negotiations with competitors.
However, the government stopped short of demanding that AT&T, which acquired satellite television service DirecTV in 2015, begin carrying SportsNet LA, the Dodgers-owned channel.
That means the shutout of the Dodgers channel — which is about to enter its fourth season — will continue unless AT&T agrees on its own to carry the channel on its DirecTV and U-Verse pay-TV systems. Pay-TV companies have insisted that SportsNet LA is too expensive.
Thursday's "settlement promotes competition among pay-television providers and prevents AT&T and DirecTV from engaging in illegal conduct that thwarts the competitive process," Brent Snyder, acting assistant attorney general in the Justice Department's antitrust division, said in a statement.
The settlement must be approved by a federal judge in Los Angeles.
The government, which did not ask for a fine, said the settlement would fully resolve the lawsuit it brought against AT&T in November. The suit alleged that DirecTV's chief content officer, Dan York, was "the ringleader of a series of unlawful information exchanges" in 2014 with three competitors — Cox Communications Inc., Charter Communications Inc. and AT&T (before the company bought DirecTV).
The information sharing in early 2014 came as another competitor, Time Warner Cable, was struggling to win carriage in Southern California for SportsNet LA.
Charter Communications, which acquired Time Warner Cable last year, remains the only pay-TV company that offers the channel.
The Justice Department, in court documents, explained that its goal was not to force AT&T to carry the Dodgers channel.
"Negotiations between video programmers and [pay-TV companies] are often contentious, high-stakes undertakings," Justice Department attorneys wrote in a supplemental court filing. "The proposed final judgment is not intended to address such negotiating tactics, or to impose any agreement upon Time Warner Cable, which owns rights to the Dodgers Channel, or any [pay-TV company] that is not the result of an unfettered negotiation in the marketplace."
Instead, the proposed settlement was designed "to prevent the competitive process for acquiring video programming from being corrupted by improper information sharing among rivals, and to prevent harm to consumers when such collusion taints that competitive process and makes carriage on competitive terms less likely," the Justice Department attorneys wrote.
As part of the settlement, AT&T employees will be forbidden from sharing information about carriage contract negotiations with outsiders, including journalists. A compliance officer will monitor AT&T employees who have access to sensitive information about distribution deals and negotiations.
In addition, AT&T must keep detailed logs of executives' communications, including whom they talked to, and periodically submit reports containing that information to the government. The Justice Department will monitor AT&T's employees' communications for five years.
"We are pleased to have resolved this matter to the satisfaction of all parties," AT&T said in a statement. A spokesman declined to comment further.
AT&T and DirecTV provide service to about 1.5 million subscriber homes in the Los Angeles region.
DirecTV's refusal in 2014 to negotiate with Time Warner Cable upended efforts to secure broad carriage for the Dodgers' channel. The long stalemate prevented thousands of Dodger fans from seeing the team's games during the final three seasons of legendary broadcaster Vin Scully's long career with the ball club.
Dallas-based AT&T appeared motivated to resolve the Justice Department lawsuit because it also is seeking that agency's approval for the its proposed $85-billion takeover of media company Time Warner Inc., which owns such prominent properties as HBO, CNN, TBS, the Cartoon Network and the Warner Bros. film and TV studio in Burbank.
The Los Angeles Dodgers had hoped the government's lawsuit would finally break the logjam that has prevented tens of thousands of Dodger fans from regularly watching the team's games on TV.
The Dodgers did not have immediate comment.
This month, Charter reached a deal with Tribune Media for 10 Dodger games to be simulcast on Tribune's KTLA-TV Channel 5 in Los Angeles in April and early May.
6:15 p.m.: This article was updated with additional information, contained in court documents, about the Justice Department's rationale for not demanding that AT&T offer SportsNet LA on its pay TV systems.
4:15 p.m.: This article was updated with additional information about a proposed compliance program for AT&T.