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Satellite-Ad Spat to Court

2/13/2010 12:00 AM Eastern

DirecTV has accused satellite-TV rival Dish Network of false advertising for a TV campaign that claims DirecTV charges substantially more for “the same programming.”

Dish's “Why Pay More” ads, which debuted nationwide Feb. 8, imply that customers can get the same channels on Dish as DirecTV — but for only $39.99 per month from Dish versus $63.99 per month from DirecTV.

DirecTV, the largest U.S. direct-broadcast satellite provider, filed a lawsuit Feb. 11 in the U.S. District Court for the Southern District of New York seeking an emergency injunction to stop the ads, an order requiring No. 2 Dish to retract its claims and run corrective ads, and unspecified monetary damages.

Dish's comparison “falsely equates apples and oranges,” according to DirecTV, because its “Choice Xtra” tier — the package cited in the Dish ad — has more than 140 video channels, while the Dish “America's Top 120” package offers fewer than 100.

DirecTV claimed Dish spent more than $1 million on the campaign in the first three days it aired. “Dish Network has flooded the airways with this false advertising,” DirecTV said in its complaint.

In a statement, Dish Network executive vice president of sales, marketing and programming Tom Cullen said, “We are pleased to compare our programming and prices to those of DirecTV. We stand by our claim that our programming, such as ESPN and Discovery Channel, is the same as their programming and, more importantly, that our customers realize significant savings over comparable programming packages from DirecTV.”

DirecTV, in its lawsuit, argued that not only does Dish's “America's Top 120” tier offer fewer channels than DirecTV's Choice Xtra package, but also that the “type and quality” of channels are substantially different.

“The programming services [that] Dish Network's 'Why Pay More' advertisement indicates are the same are, in reality, very different. They are not comparable. It is a false comparison,” DirecTV said in its complaint.

DirecTV called out 18 channels that it offers via Choice Xtra that are unavailable with the America's Top 120 package: AMC, Animal Planet, BBC America, BET, Bravo, FX, Golf Channel, Hallmark Channel, Lifetime Movie Network, MSNBC, National Geographic Channel, NBA TV, NFL Network, NHL Network, Nick Jr., Oxygen, Speed and WGN America.

The Dish ad includes a series of man-on-the-street interviews showing three TVs tuned to Dish, DirecTV and “cable.” A Dish spokesperson shows passersby the setup and tells them they “have the same programming, same quality.”

After one consumer says, “They look the same to me,” the surveyor says: “Get closer. I want to show you something. That's called DirecTV at $63 a month.” The “cable” price tag shown is $63.83 per month. When the Dish rep asks another interviewee rhetorically, “Why would you pay more?” he responds, “I'm a dummy.”

The two-minute version of the Dish “Why Pay More” ad has run on 10 different national networks, including AMC, BET, CMT, Fox News Channel, Spike TV, Syfy, TruTV and TV Land, as well as more than 20 local channels. DirecTV noted that most of those national channels are available to DirecTV subscribers — but not all are available on Dish Network's America's Top 120 package.

DirecTV has 18.4 million subscribers, while Dish has more than 14 million. The two satellite TV operators are the second- and third-biggest multichannel video programming distributors in the U.S., after Comcast.

Dish has recently been attacking DirecTV more pointedly in marketing campaigns, including one print ad last summer alleging the programming costs of DirecTV's exclusive “NFL Sunday Ticket” out-of-market subscription package are passed along to all subscribers.

In a TV spot that ran last month, Dish took a swing at its bigger satellite rival for celebrity endorsements, noting that Dish has no paid endorsements: “Maybe that's why, on average, DirecTV customers spend over $175 a year more than Dish Network customers,” the commercial's narrator says.

September