AT&T is facing several different class-action lawsuits from investors who claim they were mislead by the telecom company in regard to the ability of DirecTV Now to continue its growth.
The legal actions stem from information AT&T disclosed to the Securities Exchange Commission during the regulatory review of its Time Warner Inc. purchase.
“The registration statement touted false and misleading financial results, trends, and metrics and omitted material facts rendering those financial results, trends, and metrics materially misleading,” reads a complaint filed earlier this week in the Southern District of New York.
“Principally, the Registration Statement touted yearly and quarterly growth trends in AT&T’s Entertainment Group segment, particularly video entertainment, including quarterly subscriber gains in its DirecTV Now service sufficient to offset any decrease in traditional satellite DirecTV subscribers, such that AT&T was experiencing an ongoing trend of total video subscriber “net additions,” the suit added.
Previously the fastest growing virtual pay TV platform, DirecTV Now lost 267,000 customers in the fourth quarter following AT&T’s decision to cease a number of promotional deals. Growth metrics aren’t expected to improve much when AT&T delivers its first-quarter earnings, with the company raising the service’s price and reducing the number of TV channels it offers.
So how many class-action suits are we talking about here? More than one.
In a statement, AT&T reps called the latest class-action a “carbon copy” of a suit filed in February. Both complaints, AT&T said, are “entirely without merit.”
Subsequent to the New York filing on April 1, the Bensalem, Pennsylvania law firm of Howard G. Smith issued a press release saying it is “investigating” AT&T’s “misleading” claims in its registration statement.
“It subsequently became clear that AT&T had substantially increased prices while discontinuing promotional discounts for its DirecTV Now service and was consequently losing subscribers,” the Howard G. Smith announcement said. “On this news, shares of AT&T fell as low as $27.36 per share, a decline of nearly 16% from the $32.52 price per share on the exchange date for the acquisition, thereby injuring investors."