AT&T has been served with a Class Action in regard to its pay-TV operation DirecTV.

The Action is focused on AT&T’s purchase of Time Warner, and alleges that in its prospectus covering the proposed deal AT&T made false and/or misleading statements and failed to disclose some key facts in the prospectus.

The main complainst is that the prospectus quoted yearly and quarterly growth trends for its DirecTV NOW service as being “sufficient to offset any decrease in traditional satellite DirecTV subscribers”, and which showed that AT&T was experiencing an “ongoing trend” of total video subscribers in terms of Net Additions.

While any prospectus usually includes ample caveats and warnings as to the risks of any deal, the Action alleges that AT&T knew perfectly well that many of these “risks” were already well aware to AT&T by the time of the acquisition.

The purchase procedure of Time Warner occurred when DirecTV was discontinuing its promotional offers on DirecTV and had also raised subscription prices. Therefore, by the time of the acquisition the ‘net gain’s’ had reversed into a “severe” net loss of DirecTV’s subscribers.

Once these reverses had become known AT&T’s share prices crashed almost 12 per cent.

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