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Is AT&T (T) Trying to Settle DirecTV's Ad Suit with FTC?
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As per a recent FierceCable report, U.S. telecom behemoth AT&T Inc. (T - Free Report) is likely to resolve its DirecTV’s deceptive advertising lawsuit filed by the Federal Trade Commission (FTC) in Mar 2015.
FTC’s Claims
AT&T’s DirecTV was charged with misleading its customers through false marketing campaigns and not disclosing all its terms, which violated one of the FTC’s Acts. The company advertised only the first 12-month-subscription fee in a two-year contract. Moreover, it did not mention a $480 fine in case of an early cancelation of the contract. Also, FTC claimed that DirecTV’s website was rather confusing and did not convey any detailed information related to any purchase. Plus, the agency accused the company of misleading customers about free three-month trials of premium channels such as HBO and Showtime.
The Settlement
AT&T and FTC are recently looking to settle their two-year-old lawsuit. Reports state that DirecTV and the FTC's Bureau of Consumer Protection have reached a consensus on the material terms of the settlement. The terms are still being kept under wraps by both sides. The settlement also awaits an approval by a FTC commission body, after which all the claims will be dissolved.
The case filed includes an estimated $4 billion as monetary relief for the affected customers.
Recent Lawsuits
Recently, U.S. national wireless carrier Sprint Corp. (S - Free Report) won $139.8 million as a damage recovery payment from Charter Communications Inc.’s (CHTR - Free Report) 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. Charter Communications is the second largest cable multi-service operator (MSO) in the U.S. after Comcast Corp. (CMCSA - Free Report) .
Bottom Line
Lawsuits or legal proceedings, along with their related fines, act as major dampeners for any company’s financials and long-term growth. Sometimes, these charges also affect the company’s credit ratings. To remain clean in every aspect, a company should avoid illegal business practices and other such related activities. Major regulatory bodies such as the U.S. telecom regulator Federal Communications Commission (FCC) or the Mexican telecom regulator Federal Telecommunications Institute (IFT) approve different deals, mergers and acquisitions. They can also punish the players when caught violating a business norm or engaging in illicit and unlicensed dealings.
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) have approved a labor agreement related to 280 CWA-represented former DirecTV employees in Delaware, Maryland, New Mexico and Oregon.
In the past three months, AT&T returned 1.58%, while the Zacks-categorized Wireless National industry declined 0.31%.
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Is AT&T (T) Trying to Settle DirecTV's Ad Suit with FTC?
As per a recent FierceCable report, U.S. telecom behemoth AT&T Inc. (T - Free Report) is likely to resolve its DirecTV’s deceptive advertising lawsuit filed by the Federal Trade Commission (FTC) in Mar 2015.
FTC’s Claims
AT&T’s DirecTV was charged with misleading its customers through false marketing campaigns and not disclosing all its terms, which violated one of the FTC’s Acts. The company advertised only the first 12-month-subscription fee in a two-year contract. Moreover, it did not mention a $480 fine in case of an early cancelation of the contract. Also, FTC claimed that DirecTV’s website was rather confusing and did not convey any detailed information related to any purchase. Plus, the agency accused the company of misleading customers about free three-month trials of premium channels such as HBO and Showtime.
The Settlement
AT&T and FTC are recently looking to settle their two-year-old lawsuit. Reports state that DirecTV and the FTC's Bureau of Consumer Protection have reached a consensus on the material terms of the settlement. The terms are still being kept under wraps by both sides. The settlement also awaits an approval by a FTC commission body, after which all the claims will be dissolved.
The case filed includes an estimated $4 billion as monetary relief for the affected customers.
Recent Lawsuits
Recently, U.S. national wireless carrier Sprint Corp. (S - Free Report) won $139.8 million as a damage recovery payment from Charter Communications Inc.’s (CHTR - Free Report) 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. Charter Communications is the second largest cable multi-service operator (MSO) in the U.S. after Comcast Corp. (CMCSA - Free Report) .
Bottom Line
Lawsuits or legal proceedings, along with their related fines, act as major dampeners for any company’s financials and long-term growth. Sometimes, these charges also affect the company’s credit ratings. To remain clean in every aspect, a company should avoid illegal business practices and other such related activities. Major regulatory bodies such as the U.S. telecom regulator Federal Communications Commission (FCC) or the Mexican telecom regulator Federal Telecommunications Institute (IFT) approve different deals, mergers and acquisitions. They can also punish the players when caught violating a business norm or engaging in illicit and unlicensed dealings.
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) have approved a labor agreement related to 280 CWA-represented former DirecTV employees in Delaware, Maryland, New Mexico and Oregon.
In the past three months, AT&T returned 1.58%, while the Zacks-categorized Wireless National industry declined 0.31%.
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.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>