(DISH) Dish Network Encounters a Federal Lawsuit

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.

Read the full analyst report on “DISH”
Read the full analyst report on “DTV”
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