Comcast has filed a lawsuit against top DBS provider DirecTV over what the cable giant claims is false advertising through multimedia messaging that promises "free" access to the popular NFL Sunday Ticket out-of-market package.
Filed in the U.S. District Court in Chicago, Comcast seeks to enjoin DirecTV's campaign's messages about Sunday Ticket being available at "no extra charge" or "free," as well as collect punitive damages and recover attendant legal costs.
The suit claims that "in the wake of the recent resolution of the NFL's labor dispute, defendant DirecTV has launched a multi-million-dollar, multimedia advertising campaign, baiting consumers with the claim that DirecTV's popular NFL Sunday Ticket service -- which ordinarily costs hundreds of dollars per year -- is currently available for 'free' or at 'no extra charge.' Unfortunately for consumers the claim of 'free' is an outright lie."
Comcast notes DirecTV's Sunday Ticket offer "requires a two-year contract with hefty termination fees for early cancellation," with the service automatically renewing for the second season "at full price."
Officials at DirecTV, after initially calling Comcast's action as being "completely without merit" and indicating that they plan "to defend ourselves vigorously," took a more strident tone with a second statement.
"We think it's deplorable that Comcast is trying to compete in the courtroom rather than in the marketplace. New customers who sign up for DirecTv can indeed get NFL Sunday Ticket at no extra charge for one year and there is no requirement to subscribe to NFL Sunday Ticket the following year," DirecTV said. "The last thing we want to do is mislead new customers; that's not exactly a smart way to begin a relationship. Comcast knows that, they just have no other way to compete with our best offer of the year."
DirecTV's offer for Sunday Ticket, which provides subscribers with all NFL games carried by Fox and CBS on Sunday afternoons, makes the service available for no extra charge to those purchasing the Choice Xtra package or a higher level of service. The Sunday Ticket's full regular-season retail price is $334.95.
On the TV side, Comcast's suit cited three ads, "Helicopter," "Only Game" and "Eagles," as being deceptive.
The latter two feature retired defensive back Deion Sanders, an NFL Network analyst who will be inducted into the Pro Football Hall of Fame on Saturday, fluttering about in a fairy costume. In particular, DirecTV seems to have ruffled Comcast's feathers with "Eagles" because that creative flies into Philadelphia, its home market, indicating that cable customers are unable to watch Philadelphia Eagles games on Sunday. The MSO's complaint points out that not only does it distribute every one of the team's tilts "live," but it's the club's exclusive telecommunications category sponsor.
The lawsuit acknowledges that the commercials contain "purported disclaimers that appear fleetingly at the bottom of the screen, in a faint grey font, which arguably purport to contradict and/or qualify the ‘no extra charge' claim." The suit maintains that these disclaimers were intentionally crafted by DirecTV to be "inconspicuous, illegible to consumers and easily missed or ignored by consumers entirely."
Doug Masters, a lawyer at Loeb & Loeb, which filed the complaint on behalf of Comcast, declined to comment when asked via email about how many customers have switched to the MSO since DirecTV kicked off the campaign. The suit requests that the DirecTV account for and pay over treble damages to Comcast for "all profits wrongfully derived by DirecTV through its false and misleading representations."
While DirecTV CEO Mike White did not address the Comcast lawsuit on the DBS giant's second-quarter earnings call with analysts on Thursday afternoon, he did say that the company gave the financial community a hint in December at its "Analyst Day" that because of the then-pending NFL lockout, it would think differently about Sunday Ticket this year.
"We had to have a promotion that if the strike was continuing that we actually had an attractive enough promotion without the NFL that would work in the third quarter," White said. "We had to design the promotion not knowing whether they were going to settle or not. The second and more important strategic point was we had come to the conclusion that it was critically important for us given the long-term contract we have with the NFL at a higher cost and given that it's a fixed cost, that we find a way to get more subscribers to sample or try NFL Sunday Ticket to try and get them to renew next year to build that franchise. That's really the reason we went with this particular offer."
In the second quarter, DirecTV reported that it added 26,000 subscribers, versus 100,000 in the corresponding year-ago period.
Mike Farrell contributed to this story