Dish Encounters a Federal Lawsuit - Analyst Blog
August 24 2012 - 11:37AM
Zacks
Dish Network Corp.
(DISH) – the second largest satellite TV
provider in the U.S. – again seems to get into trouble when the
U.S. Federal Trade Commission (FTC) brought litigation against the
company for infringing telemarketing rules.
To market its TV services, Dish
Network has been making repetitive calls to customers living in
Illinois and adjacent states since 2007, despite customers asking
the company not to disturb them.
If Dish Network is condemned of
violating telemarketing rules, it may have to pay a penalty of
$11,000 to $16,000 per call, based on their call time basis.
In 2009, the U.S. Department of
Justice also sued Dish Network for calling several customers who
were already registered under the "Do Not Call" list.
A similar incident took place in
2005, when the FTC charged DIRECTV (DTV) for
calling people registered under the "Do Not Call" list. The company
finally settled the issue by paying $5.3 million to the FTC.
A few days back Dish Network was
sued by several major TV broadcasters for introducing the Auto Hop
technology that allows subscribers to skip commercials while
watching their favorite TV shows. The court decision is still
pending.
We believe that the continuous
involvement of Dish Network with such lawsuits may act as a
headwind for the company going forward.
Currently, Dish Network has a Zacks
#3 Rank, implying a short-term Hold rating on the stock.
Considering the fundamentals, we are also maintaining our long-term
Neutral recommendation on the company’s shares.
DISH NETWORK CP (DISH): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
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