AT&T forged DirecTV Now figures, claims lawsuit – TechCrunch
AT&T falsified figures for its streaming service DirecTV Now ahead of the company's Time Warner merger, according to a lawsuit filed by investors, Bloomberg reported. In the suit, the media giant allegedly pressured employees to increase DirecTV Now numbers by secretly adding the product to existing customers' accounts. It also claims that the company is spying on user growth for DirecTV Now, as subscribers in fact left when their promotional periods ended, and the service's price hikes limited new subscriptions.
The suit states that a variety of tactics were used to promote the idea that DirecTV Now was growing organically. It claims, for example, that employees were taught how and encouraged to convert the activation fee that customers typically had to pay to upgrade their phones to a DirecTV Now subscription. This meant that the customer was told that the charge was "waived" as the customer was charged anyway and the payment was used for up to 3 DirecTV Now accounts using fake emails.
A former employee even said that around 40% ̵[ads1]1; 50% of the customers he worked with in early 2017 complained about being charged for DirecTV Now, something they had never signed up for. This was supported by other employees, the suit quotes, and was a directive that came from top management to the sales channel.
In addition, the suit speaks to overly aggressive sales quotas, high uncertainty from deeply discounted campaigns, technical problems, and unsustainable pricing. It noted how AT&T finally revealed that by the end of 2018, none of the 500,000 heavily discounted DirecTV Now subscribers remained on the service, and subscriptions had dropped by 267,000 as a result. In April 2019, it reported that another 83,000 subscribers had left the service, and in July, 168,000 had left it.
But ahead of the Time Warner merger, AT&T pointed out the service's success, according to the suit. It did not disclose any of the risks associated with DirecTV Now, despite SEC obligations. The plaintiffs believe AT&T should have noted what made the shares risky, including the fact that DirecTV Now was not profitable, growth had been dependent on aggressive campaigns, and it posed serious technical challenges.
"By purchasing AT & T's securities at these artificially inflated and artificially maintained prices, the class members suffered financial losses, which losses were a direct and immediate result of the defendant's fraudulent conduct," the suit states.
"We plan to fight these baseless claims in court," an AT&T spokesman said. said it in a statement.
DirecTV now had a rough start to begin with, after suffering heavily from glitches, including freezing, buffering and more. Although new streaming services can happen at first, AT & T & # 39; s errors were bad for many wanting to cancel.
In 2017, TechCrunch reported how customers complained that they could not receive a refund from AT&T, even though they could not use the promised service. Some had even filed complaints with the FCC, we found. In January, we also noticed how the service's price increases and promotional packages that ended up causing a significant loss of subscribers and that AT&T "lost the wires."
The filing of the lawsuit comes at a time when AT&T has seen a lot of upheaval. This month, activist investor Elliott Management Corp. revealed its $ 3.2 billion stake in AT&T and criticized the company's acquisition strategy. It also suggested that AT&T should sell some assets that do not fit the future direction, such as DirecTV's satellite service and Mexican wireless business. AT&T CEO Randall Stephenson defended the company's $ 85 billion acquisition of Time Warner today, in response to this criticism.
In addition, AT&T Chief Communications Officer John Donovan recently announced his retirement, while WarnerMedia CEO John Stankey was promoted to President & Chief Operating Officer at AT&T.
The complete complaint is below.
