Charter Communications Inc. is threatening to file a false-advertising
lawsuit against EchoStar Communications Corp. if the direct-broadcast satellite
carrier refuses to discontinue its $9-per-month, 100-channel programming
promotion running in newspapers.
In an Aug. 21 letter released Friday by EchoStar, Charter said the ad
campaign violated federal and state law because EchoStar's print ads contained
false pricing comparisons and buried significant subscriber-cost information in
a disclaimer in small typeface.
In a press release Friday, EchoStar refused to back down and promised to give
Charter subscribers until Oct. 31 to take advantage of a $100 discount on the
$199 equipment-purchase fee under its 'I Like 9' promotion.
In a statement, EchoStar chairman and CEO Charlie Ergen stood by the ad as an
accurate description of the financial savings if a Charter digital subscriber
signed up for his DBS promotion.
'Charter Communications can stomp their feet, pound their fists and threaten
to unleash their lawyers, but we will continue `I Like 9,' which is a great deal
for consumers,' Ergen said.
In the letter, Charter described EchoStar's ads as 'an illegal attempt to
deceive current and potential Charter customers into switching to (or choosing)
Dish Network satellite-television service.' The letter was signed by general
counsel and secretary Curtis S. Shaw.
According to Charter, the ads claim that EchoStar's promotion would save a
customer $462 in one year versus a subscription to Charter's digital service,
which costs $49.95 per month and includes 110 local and national channels, 68
pay-per-view channels and 45 music channels.
Charter said that in the small print of the ads, EchoStar revealed that the
$462 savings wasn't a comparison between I Like 9 and Charter's digital service,
but a comparison between I Like 9 and regular Dish service.
Moreover, Charter alleged that the ads were 'false and misleading' because
EchoStar revealed, again in small print, that in order to obtain the I Like 9
promotion, the subscriber had to pay $199 for equipment and installation and
agree to a one-year contract, at the end of which programming rates would be
'much higher.'
EchoStar's ad campaign touting I Like 9, the MSO added, 'has caused and will
continue to cause Charter to lose current and potential customers, and has
damaged and will continue to damage Charter's goodwill and reputation.'
EchoStar tried to blunt Charter's claims by listing a price comparison.
EchoStar said a former Charter subscriber who opted for I Like 9 and purchased
the local-TV-station package for $4.99 per month would pay $266.88 in the first
year, including a $99 equipment and installation fee.
The DBS firm added that a Charter subscriber would pay $14.95 for the digital
package in the first month and $49.95 every month thereafter, bringing the
one-year cost to $564.40, or $297.52 more than the I Like 9 Dish subscriber.
'Savings could be even higher if Charter continues their historical rate
increases,' Ergen said.
Charter spokesman David Andersen issued a statement in response to EchoStar's
release of the letter saying that EchoStar dropped the equipment purchase prices
by $100 to countermand Charter's dish-buyback program.
'Our dish-conversion initiatives are taking their toll. In St. Louis alone,
we've converted nearly 1,000 dish customers just this year,' Andersen
said.
