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AT&T's (T) Unit DIRECTV Settles Antitrust Lawsuit with DOJ

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U.S. telecom behemoth AT&T Inc. (T - Free Report) and its subsidiary, DIRECTV, have managed to negotiate a settlement with the U.S. Department of Justice (DOJ) on an antitrust lawsuit, as per a recent Bloomberg report. The lawsuit was filed against the company on Nov 2, 2016. 

The suit had accused DIRECTV of exchanging a series of unlawful information with three of its competitors/rivals –– Cox Communications Inc., Charter Communications inc. (CHTR - Free Report) and AT&T (prior to DIRECTV’s acquisition in 2015) –– during its negotiations to carry the Los Angeles Dodgers owned SportsNet LA.

SportsNet LA holds the exclusive rights to telecast almost all live Dodgers games in the Los Angeles area. This illegal disclosure of information affected the promotion and the carriage of the SportsNet LA network and was available only through Time Warner Cable — now owned by Charter Communications.

This led to an agreement aimed at supervising negotiations between DIRECTV and AT&T with providers of video programming and discontinuing any deal-related to the telecast of Dodgers Channel, to avoid any further leakage of information to rivals. In general, it seeks to monitor any kind of communication that the company’s programming executives have with their rivals, and to implement antitrust training and compliance programs.

The proposed settlement, along with the department's competitive impact statement, will be published in the Federal Register as required by the Antitrust Penalties and Procedures Act.

Meanwhile, AT&T recently gained approval from the European Commission, an institution of the European Union (EU), for its proposed $85.4 billion acquisition of HBO’s corporate parent and the media giant Time Warner Inc. . However, the deal awaits further clearance from the Justice Department.

AT&T is also trying to resolve DIRECTV’s deceptive advertising lawsuit case filed by the Federal Trade Commission (FTC) in Mar 2015. AT&T’s DIRECTV was accused of misleading its customers through false marketing campaigns and not disclosing all its terms, which violated one of the FTC Acts.

We hope AT&T will easily recover from its DIRECTV trial as it is anticipating the integration of the satellite operator’s core operations to drive new products like DirecTV Now. Moreover, recently, both AT&T and the Communications Workers of America (CWA) approved a labor agreement related to 280 CWA-represented former DirecTV employees in Delaware, Maryland, New Mexico and Oregon.

Over the past three months, AT&T contracted 2.57%, while the Zacks-categorized Wireless National industry declined 3.69%.

AT&T currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Lawsuits

U.S. national wireless carrier Sprint Corp. (S - Free Report) won $139.8 million as a damage recovery payment from Charter Communications’ Time Warner Cable unit for breaking digital voice telephone services’ norms. Time Warner Cable was found guilty of intentionally violating five patents for Voice-over-Internet Protocol.

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