Gross v. AT&T, Inc. et al 1:19-cv-02892-VEC — On April 1, 2019, investors sued AT&T, Inc. (“AT&T” or the “Company”) in United States District Court, Southern District of New York. The AT&T class action alleges that plaintiffs acquired AT&T stock at artificially inflated prices between October 22, 2016 and October 24, 2018 (the “Class Period”); and/or or in connection with a Registration Statement associated with the Company’s June 2018 acquisition of and merger with Time Warner. Plaintiffs are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during those times. For more information on the AT&T Lawsuit, please contact us today!
Summary of the Allegations
The Company (NYSE: T) is a self-described “global leader in telecommunications, media, entertainment and technology.”
As such, the Company has four business units or segments. These are: AT&T Communications, WarnerMedia, AT&T Latin America, and Xandr. Collectively, the Company says, these divisions represent “the four key elements that define a modern media company,” allowing it to create and provide premium content, high-speed networks, and more.
AT&T is incorporated in Delaware and maintains its headquarters in Dallas, Texas.
Summary of Facts
AT&T, and two of its senior officers and 12 of its directors (collectively the “Individual Defendants”) are now accused of deceiving investors during the Class Period.
Specifically, they are accused of doing so by: making false and misleading statements in and/or approving of the statements made in the Registration Statement; or by making false and misleading public statements following the merger and acquisition of Time Warner.
The truth came out on October 24, 2018, when AT&T announced its results for the third quarter of 2018. These results were significant because they were the first following the acquisition of and merger with Time Warner. Alarmingly, the results reflected dramatic losses in the number of “Traditional DirecTV” satellite subscriber losses and “DirecTV Now” subscribers.
In all, the results for the quarter reflected a net loss of more than 290,000 total video subscribers. This prompted one analyst to lambast the Company, saying: “AT&T hit a brick wall when it raised TV prices.” Based on the results another analyst concluded that, “…the stock is likely dead money now.”
A closer look…
As alleged in the April 1 complaint, the Company and/or Individual Defendants repeatedly made false and misleading public statements during the Class Period.
For example, in an announcement about the acquisition made at the beginning of the Class Period, the Company said the transaction would: “[combine] Time Warner’s vast library content and the ability to create new premium content that connects audiences around the world, with AT&T’s extensive customer relationships, world’s largest pay TV subscriber base and leading scale in TV, mobile and broadband distribution.”
Then, in the Registration Statement approved by the SEC on January 5, 2017 and declared effective as of the next day, the Company touted: “yearly and quarterly growth trends in AT&T’s Entertainment Group segment, particularly Video Entertainment, including quarterly subscriber gains in its DirecTV Now services sufficient to offset any decrease in traditional satellite DirecTV subscribers…”
Finally, in a June 21, 2018 press release following the acquisition, the Company stated that it, “expects total video and broadband subscribers to increase, with DirecTV Now subscribers more than offsetting continued declines in traditional TV subscribers.”
What the Company never disclosed, however, was that it had “substantially increased prices while at the same time discontinuing promotional discounts for its DirecTV Now service.” The Company also failed to disclose that this resulted in a lack of renewals and new subscribers.
Impact of the Alleged Fraud on AT&T’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is May 31, 2019. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in AT&T common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.