Charter Communications won the first round in its most recent battle with DirecTV, obtaining a temporary restraining order against the satellite giant that will force it to halt radio, print and direct-mail ads the cable operator called misleading.
Charter Communications filed suit in U.S. District Court for the Eastern District of Missouri late last Monday, alleging that satellite-TV giant DirecTV has targeted its customers with misleading ads claiming the cable operator's bankruptcy will affect service.
According to the suit, the direct print advertisements prominently featured a life preserver with the tagline: “With Charter Cable filing for bankruptcy, now's the time to save yourself. Get help while you can. Get DirecTV.”
In the suit, Charter requested a temporary restraining order against DirecTV to cease running the ads, compensation from the satellite giant for any “corrective advertising,” and unspecified damages. That restraining order was issued by U.S. District Judge Rodney Sippel on May 13 and is in effect until May 23, or until an intervening order is issued. Basically, it allows DirecTV to continue running ads pointing out that Charter is bankrupt, but the satellite giant can no longer claim it will prevent the cabler from providing service.
“We are pleased that a temporary restraining order against DirecTV's clearly false and misleading advertisements was granted,” Charter executive vice president and general counsel Grier Raclin said in a statement. “While we are well-positioned for competition, we believe competition should remain fair and truthful. Charter's operations are strong and our customers can feel confident that we will continue to serve them as usual, including providing them with high quality video, Internet and phone service during and after our restructuring.”
In a statement, DirecTV said it would comply with the order.
“The only thing the Order requires is that we avoid specific statements making predictions about the outcome of the bankruptcy,” DirecTV spokesman Robert Mercer said in a statement. “We will make the necessary adjustments and continue with the campaign.”
Charter filed for Chapter 11 bankruptcy protection on March 27, a prepackaged deal that will shave about $8 billion in debt from its balance sheet and pump another $3 billion in new equity into the company. Last week Charter crossed another milestone in the process — the bankruptcy court approved its disclosure statement — and a stakeholder vote on the plan is set for June 15.
All the while, Charter has insisted that its bankruptcy filing would not affect operations and that customers would experience no changes in their service. And that showed in its first-quarter results, which were in line with its larger publicly traded peers.
According to the lawsuit, DirecTV through print, billboard and radio ads, direct mail pieces sent in six states (Connecticut, Louisiana, Michigan, Missouri, South Carolina and Wisconsin), and personal solicitations falsely claimed that Charter would not be able to provide customers with the service they had become accustomed to.