DirecTV mis-selling suit stumbles over $4 billion price tag

It looks like the DirecTV mis-selling dispute brought by the FTC in the US may have run into obstacles – the presiding judge wants to go through the logic of how the FTC came up with the $4 billion damages calculation.

The federal judge in the California court has gone to the trouble of pausing the trial after two weeks saying he will let AT&T file for a partial summary judgment – meaning he may only hear part of the case and that means part of the damages. It’s like an invite to AT&T to say how much it is prepared to pay and try to convince the court of that.

The suit has been around since 2015 and it claims that from 2007 as DirectTV grew to over 30 million customers, it did not adequately disclose details about some of its offers.

In particular that its cut-price 12-month package required a two year commitment or that a fine of $480 would be charged if a viewer dumped the package inside 2 years. Also some premium channels were only part of the deal for as little as 3 months and after that needed to be paid in full.

A professor of economics acting as expert for the FTC was cross-examined by AT&T lawyers, and his testimony appears to have influenced the judge into considering AT&T’s motion for a partial judgment. His failure to interview any customers is understood to have holed in the FTC calculations under the water line.

The dramatic opening address two weeks back disclosed the figure of a fine of $3.95 billion which the FTC was calling for. We said at the time that the court was not obliged to award anything like as much as the FTC’s opening gambit, especially since many customers had stayed with DirecTV for over 5 years, which makes the initial mis-selling hard to make stick.

This all covers up that the DirecTV acquisition has so far been something of a failure on revenues, although recent broadband moves by AT&T look set to use the DirecTV video services over broadband lines, creating a direct attack on cable (see last week’s issue).