News

WAR OF WORDS

3/30/2010 6:22 AM Eastern

Look, up in the sky! It’s
the two direct-broadcast satellite
operators going for each
other’s jugulars.

The slugfest between DirecTV
and Dish Network over marketing
claims continued last week.
Dish fi led a countersuit charging
the larger operator with
falsely advertising its HD services,
after DirecTV accused Dish
of inaccurately comparing the
two providers’ programming
packages.

The lawsuits — and the increasingly
negative comparative
ads — come as
the growth in the pay TV sector
slows. Over the next decade, SNL
Kagan expects multichannel
penetration of TV households to
drop from 84.4% as of the end of
2008 to 83.3% by 2019.

“Like the cellphone battle between
AT&T and Verizon today,
the Dish-DirecTV conflict becomes
more and more a war of
differentiation, perceived or actual,”
said Jimmy Schaeff ler,
chairman of consulting firm The
Carmel Group.

And Dish and DirecTV, as single-
play TV service providers,
need to fight harder to compete
against cable and telco tripleplay
bundles.

“Subscriber retention is a
huge issue for all of the service
providers, and Dish and Direc-
TV are particularly vulnerable
right now, given their weak positions
in both interactive services
and bundles, where cable and
IPTV have a leg up,” Parks Associates
principal analyst Kurt
Scherf said.

The satellite operators, Scherf
added, are “particularly sensitive
in areas where they feel
like they have a distinct competit
ive advantage, such as
the number of high-definition
channels they offer and their
core pricing.”

In its countersuit, Dish alleged
that several DirecTV ads are misleading
because they tout HD
but conclude by showing a price
— $29.99 per month — for a basic
package that includes no HD
channels.

In addition, Dish complained
that the bigger satellite operator
falsely implies that it off ers more
than 200 HD channels. “DirecTV
has repeatedly advertised that it
has the capacity for 200 channels
of HD programming, without
clarifying that DirecTV does
not actually off er 200 channels,
in a manner that is likely to mislead
consumers,” Dish said in
its suit, filed in the U.S. District
Court for the Southern District
of New York.

The Dish lawsuit “is clearly
in response to our recent objections
to Dish’s misleading advertising,”
said DirecTV spokesman
Robert Mercer.

DirecTV last month filed
suit in the same court
over Dish’s “Why Pay
More” ad campaign, which implies
that customers can get a
channel lineup from Dish for
only $39.99 per month that’s
comparable to one from DirecTV
for $63.99 per month. The
court denied DirecTV’s emergency
injunction to stop the ads
and found that it failed to prove a “likelihood of success on the
merits.”

Meanwhi le, DirecTV now
is running a TV ad campaign
aimed at countering Dish’s
“Why Pay More?” ads. The DirecTV
spots feature Jeopardy’s
Alex Trebek hosting a game show
called “To Tell the Truth” with
three contestants: “cable,” DirecTV
and Dish.

In one of the spots, the Dish
representative says, “We offer the
same TV as DirecTV, for less.” The
DirecTV rep jumps in: “Does ‘the
same’ include channels like AMC,
Animal Planet, Bravo, FX — ”

The Dish rep concedes, “Not in
our basic package, like yours.”

Dish in its countersuit reiterated
that its original ads compared
the Dish “America’s Top 120”
package with DirecTV’s “Choice”
package, whereas the DirecTV
“To Tell the Truth” spots compare
the Dish AT120 and Direc-
TV “Choice Xtra” tiers.

Dish’s countersuit seeks an injunction
blocking the DirecTV
ads in question as well as unspecified monetary damages.

SATELLITE SMACKDOWN
The two satellite-TV operators accuse each
other of misleading ads:

DirecTV’s Feb. 11 complaint: “Dish Network began running
a nationwide television commercial … which repeatedly and
falsely claims that Dish Network charges significantly less than
DirecTV for the same services … Dish Network has flooded the
airways with this false advertising.”

Dish’s March 22 countersuit: Certain DirecTV ads include
“deceptive messages related to package pricing, the number
of HD channels offered by DirecTV, the number of HD channels
offered by Dish Network, and purported excessive or extra
charges associated with Dish Network.”

SOURCE: Court filings

November

Next TV

Affinia Manhattan, New York, NY