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Opinion: DirecTV’s alleged antitrust violation saved you money

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At the risk of seeming indifferent to price fixing, I feel compelled to show some love for DirecTV.

The Justice Department filed suit against the satellite TV giant Wednesday, accusing it of persuading other pay-TV operators not to cut deals with Time Warner Cable to carry SportsNet L.A., the grossly overpriced channel that’s the exclusive outlet for Dodger games. According to the DOJ’s complaint, DirecTV and its SoCal pay-TV rivals — Charter, Cox and AT&T — kept one another informed about their supposedly secret negotiations with Time Warner Cable over SportsNet L.A. The alleged goal was to make sure no one broke from the refusenik pack, intensifying the pressure on Time Warner Cable to cut its asking price for the Dodger channel.

The allegations are serious, and if the DOJ is right, DirecTV should be penalized. Disputes over carriage fees are happening with growing regularity; if competitors are allowed to collude on the price for programming, that spells trouble for anyone in the programming business.

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When DirecTV pushed back against Time Warner Cable, it was fighting the good fight for most pay-TV subscribers

But dang, Time Warner Cable was reportedly demanding close to $5 a month per subscriber for SportsNet L.A. — not just from people who might sign up for the channel, but from the pay-TV companies’ entire customer base. That’s on top of the nearly $4 a month that Time Warner Cable reportedly extracted for the Lakers channel. In other words, if DirecTV et al. had just said yes, cable and satellite bills across the Southland would have been jacked up at least $9 a month by ridiculously priced channels dedicated to just two (count ‘em, two) teams.

Those prices reflect the king’s ransoms that popular teams and leagues have been able to command for their broadcast and retransmission rights. Time Warner Cable agreed in 2013 to pay the Dodgers’ new owners $8.35 billion over 25 years for the rights to the Dodgers — with no guarantees about the quality of the product. They did so knowing that their fellow pay-TV businesses, which long operated as near monopolies, had reflexively agreed to ever-higher programming fees because collectively they had a captive audience. That’s why cable bills have gone up and up and up, rising far faster than inflation.

Programmers have also resisted mightily any attempt to offer their channels on an a la carte basis, which would force only those who are actually interested to foot the bill for them. That’s because they’d have to charge far more on an a la carte basis than they do when their niche programming is bundled in the basic or expanded-basic tiers, where all or most subscribers will be charged regardless of whether they even want the channel.

Yes, there are other arguments against switching to a la carte pricing for pay-TV channels; the one heard most often is that the current system makes more programming available by having viewers cross-subsidize one another’s favorite channels. Nevertheless, pay-TV operators’ practice of making all subscribers pay for the most popular (and costly) is like a tax on anyone with little or no interest in those games.

The industry may finally have worn out consumers’ tolerance for this kind of gouging. For proof, witness the rising percentage of households that don’t subscribe to either cable or satellite TV, as well as the emergence of lower-cost bundles of TV channels online.

This may seem heretical, but most people who live in the greater Los Angeles metropolitan area probably would opt not to pay extra to watch the Dodgers. So when DirecTV pushed back against Time Warner Cable, it was fighting the good fight for most pay-TV subscribers. It’s too bad that it may have cheated as it did so, because that distracts from the rightness of the cause.

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(A few programming notes: DirecTV is now an arm of AT&T, which is trying to buy Time Warner Cable’s erstwhile corporate sibling, Time Warner, which owns such major cable networks as HBO and CNN. [Time Warner Cable spun off from Time Warner in 2009, and was subsumed into Charter earlier this year.] The antitrust lawsuit could make it harder for AT&T to persuade the Department of Justice that its purchase of Time Warner would be good for competition; to that end, AT&T has said it will use Time Warner’s programming to push the industry toward a la carte pricing, and it will offer a low-cost package of TV programming to viewers online.)

jon.healey@latimes.com

Twitter: @jcahealey

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