Charter Communications filed suit in federal district court for the eastern district of Missouri late Monday, alleging that satellite TV giant DirecTV has targeted its customers with misleading ads claiming the cable operator's bankruptcy will affect service.
Charter filed for Chapter 11 bankruptcy protection on March 27, a pre-packaged deal that will shave about $8 billion in debt from its balance sheet and pump another $3 billion in new equity into the company. Last week, Charter crossed another milestone in the process - the bankruptcy court approved its disclosure statement - and a stakeholder vote on the plan is set for June 15.
In the court filing, Charter accused DirectTV of targeting its customers in ads that were designed to create the impression that Charter's restructuring will adversely affect its customers.
According to the lawsuit, DirecTV through print, billboard and radio ads, and direct-mail pieces sent in six states -- Connecticut, Louisiana, Michigan, Missouri, South Carolina and Wisconsin -- and personal solicitations falsely claimed that Charter would not be able to provide customers with the service they had become accustomed to.
According to the suit, the direct print advertisements, prominently featuring a life preserver, stated:
"With Charter Cable filing for bankruptcy, now's the time to save yourself. Get help while you can. Get DirecTV."
All the while, Charter has insisted that its bankruptcy filing would not affect operations and that customers would experience no changes in their service. And that showed in its first-quarter results, which were in line with its larger publicly traded peers.
Charter would not comment directly on the litigation, but in a statement pointed out that it has increased its free video on demand library for customers, provided free upgrades to existing high-speed Internet customers to faster speeds (20 Megabits per second) and launched one of the fastest HIS services in the country (60 Mbps) to select markets.
"To reiterate, the fact is that Charter's operations are strong and our customers can feel confident that we will continue to serve them as usual, including providing them with quality cable, Internet and phone service, through our restructuring process and beyond," Charter said in a statement.
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