AT&T Is Getting Sued for Misleading Investors Over DirecTV Now
Published on April 4, 2019
- AT&T is getting sued over DirecTV Now price hike, claiming they misled investors.
- As AT&T stock crashed after new prices were announced, investors lost money.
- They Also claim promises of DirecTV Now growth can't be kept.
It's barely been a couple of weeks since AT&T turned its DirecTV Now platform upside down and the company is already getting sued for misleading investors.
So, a few weeks back, DirecTV Now's five bundles suddenly vanished and two new ones appeared in their stead. They carried fewer channels but integrated HBO (in Plus and Max) and Cinemax (in Max) in an effort to justify the price. Then, the old bundles, five in total, reappeared carrying a different name and had prices that were pretty much double than what they used to be. We wrote all about it back when it happened. Naturally, this annoyed a lot of people.
The crux of the problem is that back in 2018 when AT&T was doing everything it could to get the approval of its Time Warner Inc. acquisition, they swore up and down that prices for DirecTV Now wouldn't go up; they'd go down instead. That obviously didn't happen. During the acquisition, about 1.185 billion new shares of AT&T common stock were also issued to Time Warner shareholders. Following the announcement of the price hike, the shares tanked, making people lose money.
Now, the Law Offices of Howard G. Smith announced a class action lawsuit was targeting AT&T over misleading investors. On top of hiking the prices which caused people considerable losses, AT&T also promised that DirecTV Now would continue to grow. Given the fact that they lost over 260,000 subscribers back in December and that they're likely to lose a lot more after the move they pulled in mid-March, chances are against them being able to keep their promise.
"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. 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," reads a statement posted online by the lawyers handling the class action lawsuit.
Of course, it remains to be seen whether or not AT&T will lose the trial, or if they'll settle out of court, but things aren't looking up for the giant telco. We'll keep you updated on the progress.
Until then, tell us how you feel about the new DirecTV Now prices and bundles by dropping a comment in the section below. Share the news online so others can hear about it too, and follow TechNadu on Facebook and Twitter for more tech news, guides, reviews, and interviews.
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