DirecTV lawsuit gets hot and heavy with Playboy

By Matthew Belloni

DirecTV executives think the Playboy Channel is cheating on them.

The satellite broadcaster on Friday sued Playboy Entertainment Group and Spice Hot Entertainment claiming that the networks promised they wouldn't negotiate better deals with other distributors but have now violated that "most favored nations" clause in their deals.

The lawsuit, filed in Los Angeles Superior Court, claims that a 2007 agreement provides DirecTV a guarantee of at least as favorable a deal as Playboy and Spice negotiate with other broadcasters. The contract also allegedly provides an audit right, which DirecTV execrcised in August via a PriceWaterhouseCoopers review.

"Based on what DirecTV has learned from Defendants, PwC informed Defendants that they are not in compliance with the MFN clause," the lawsuit states. "Defendants, however, have not offered DirecTV any more favorable terms for distributing Defendants' programming services and have not authorized PwC to disclose any of the information they collected during the audit."  

Citing confidentiality provisions, DirecTV does not say what the actual deal terms are, nor does the lawsuit specify damages. The breach of contract complaint was filed by Melissa Ingalls and R.C. Harlan of L.A.'s Kirkland & Ellis.