DirecTV, DishGetting Justice Department Scrutiny Over Programming Contracts?

DirecTV  and Dish Network Corp. have received requests from the U.S. Justice Department about pricing contracts with television networks, part of a broader probe into whether subscription TV distributors are preventing the emergence of  Internet-based competitors, according to Bloomberg. 


Ultimately, many of us would argue, the older subscription TV paradigm cannot be challenged unless content owner contracts allow competitors access to the professionally-produced programming consumers are used to getting from their subscription TV providers.


Just as obviously, neither content owners nor distributors will do anything to jeopardize the existing economics of the business. So the wild card is government intervention to force change. 


The Justice Department sent civil investigative demands, which are similar to subpoenas, to DirecTV and Dish, the two largest U.S. satellite-TV providers. 


The government wants information about "most- favored-nation" provisions, which give distributors companies favorable pricing and terms. Those contracts also restrict Internet delivery rights. 


Regulators are concerned that the conditions are preventing smaller startups and Internet-video distributors from obtaining programming rights. If DoJ finds the most-favored nation clauses are anti-competitive, and bars them, there is at least a chance of disruption in the video market.