Boston agency battles with AT&T Broadband

Jan 14, 2002  •  Post A Comment

Prime Communications, a Boston advertising agency, says AT&T Broadband barred Prime from buying ad time on some of AT&T’s cable systems, a move that would force Prime’s auto-dealer clients to purchase time from AT&T directly.
The allegations, contained in a little-noticed antitrust lawsuit filed last summer, may send a warning message to the so-far somnambulant ad industry about the potential impact of continued media consolidation.
In its suit, Prime contends AT&T tried to use the monopoly power of its cable system to force advertisers to buy its cable ads and other products. It also alleges AT&T tried to force out a competitor.
Prime handles 130 of the 700 auto dealerships in Massachusetts, and the agency’s 2000 revenues exceeded $20 million. The agency also represents car dealers in Southern New Hampshire, Rhode Island and Connecticut.
Prime produces print, TV and radio ads. The agency also buys time and manages Web sites, including one called cablecars.com, where area residents can search for a specific car among the dealers. Last April, Prime started selling a service called Prime IQ that enables dealers to track which ads lured which customers.
According to Prime’s antitrust case, AT&T-seeking a bigger share of its clients’ media buys, planning to launch its own tracking service for cable ads and wanting car dealers to use its Web site instead of Prime’s-tried to buy Prime IQ and get Prime to commit to selling its dealers on cable. When Prime rejected the offer on the grounds it needed to evaluate buys dealer by dealer, AT&T, which owns the bulk of Massachusetts-area cable systems, responded by barring Prime from buying any cable ad time, the suit alleges. It also offered its own advertising production services to dealers and cut prices to get dealers to sign on to the offer, according to the suit.
AT&T sought to have the case dismissed, arguing in part that Prime could still buy other media and that the agency didn’t have standing because it was acting only as an agent of car dealers. AT&T called the lawsuit “entirely without merit.” It said it neither violated federal antitrust laws nor engaged in any uncompetitive activities.
“It’s not a level playing field,” said Neal Bocian, Prime’s president. If [AT&T] can do this, tomorrow they can go out and buy Domino’s and say, `From now on we will have no more pizza commercials.’ They are trying to use their leverage in cable to knuckle me under.”
Consumer groups say the issues raised in the Boston case mirror those faced by the government in related consolidation decisions to be issued in the next several months. Among them: the proposed purchase of AT&T Broadband by Comcast Corp., and EchoStar Communications Corp.’s (DISH Network) purchase of Hughes Electronics’ DirecTV.
The case could also potentially affect two FCC decisions-one on cross-ownership of cable and broadcast outlets in a single market and one that may lift limits capping the maximum percentage of the cable audience a broadcaster can reach.
“If you remove the limit on [broadcasters or cable companies] owning newspapers, we are talking not just about a cable, Internet, radio and magazine conglomerate,” said Chris Murray, Internet and telecommunications counsel for Consumers Union. “We are talking about an everything-you-can-think-of conglomerate. It not only has an immense effect on the advertising marketplace, but it really limits the marketplace of ideas.”