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Lawsuit Charges DIRECTV With Receiver Rip-Off

Discussion in 'DIRECTV General Discussion' started by alexjb12, Feb 24, 2008.

Do you agree with this lawsuit, against Directv?

  1. Absolutely, I agree that this is a case of bad business practice

    0 vote(s)
    0.0%
  2. I don't agree with this lawsuit at all

    275 vote(s)
    43.7%
  3. I don't agree with the lawsuit, but getting back the upfront costs would be nice

    188 vote(s)
    29.8%
  4. No Comment or Abstain

    167 vote(s)
    26.5%
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  1. mikewolf13

    mikewolf13 Icon

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    Interesting how that $599 was alot more than the cost listed on the recent Investor day report even at it's highest point....so you pay double their cost, pay a lease fee, and have to return the box....

    I wish the design team was as skilled as the finance team.
     
  2. Ken S

    Ken S RIP

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    Feb 12, 2007
    Hey...DirecTV is a pretty profitable business...they do however have a few billion in debt to pay off :)
     
  3. Rich

    Rich DBSTalk Club DBSTalk Club

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    Hey Mike,

    Talked to my accountant last night in detail about your original thoughts in that earlier post. She stated categorically that corporations have to hire an outside accounting firm to audit them when they issue (or probably prior to?) their yearly financial statements. I believe she said the SEC would be the investigating body if wrongdoing was suspected.

    So, depending when their fiscal year ends, an audit will take place. And an audit took place last year. My question is this: Do third party auditors understand enough about the sat business to understand an overstatement of leased receivers? From what I could gather from the conversation last night, the audit is focused on accounting practices. Would that outside auditor understand enough about D* to actually notice that they are "leasing" TiVos and Ultimate TV DVRs (that is an assumption on my part)? And including them in the yearly statement?

    Rich
     
  4. jahgreen

    jahgreen Godfather

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    Dec 15, 2006
    I read the post as being $599 for three receivers: one HR20 and two D11. Also it wasn't clear whether there was anything else included in the order. Anyway, I'm not sure that the payment exceeded the announced cost.
     
  5. mikewolf13

    mikewolf13 Icon

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    Jan 30, 2006
    Based on my limited experience being involved in the process...

    I would assume they would review the depriciation #s and ask how they get that number. What controls are in place to ensure accuracy of that number and those controls are suppossed to be tested to make sure they are effective.

    Some corps SOX processs is more detailed than others.. I don't know how effective DTV's is or isn't.
     
  6. mikewolf13

    mikewolf13 Icon

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    Jan 30, 2006
    maybe for that poster..but many people did pay a list price of $599 when the HR20 was released.
     
  7. jahgreen

    jahgreen Godfather

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    Dec 15, 2006
    Yes, all public companies have to issue certified financials, which requires an audit every year. Given the prominence of the change from selling to leasing the boxes, I have no doubt the auditors will have their eye on that ball.

    But bear in mind, DirecTV's revenues exceeded $17 billion in 2007, and its net income was just under $1.5 billion. I bet it would take a very, very big number of boxes mischaracterized as leases before it would have a material impact on the financial statements. And if it isn't material, there won't be any officers going to jail or suffering civil penalties.

    That's different than whether the subscriber class action might have some merit. But even there, DirecTV could write a pretty hefty check without having a material impact on its financial statements.
     
  8. Rich

    Rich DBSTalk Club DBSTalk Club

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    OK, I get that, but what if the third party auditors are ignorant of the fact that TiVos and other associated "owned" equipment aren't supposed to be on the books as "leased"? Wouldn't the lawyers in the class action suit demand an audit based on specific points of interest rather than making sure proper accounting protocols were in place and being used?

    Rich
     
  9. Rich

    Rich DBSTalk Club DBSTalk Club

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    Were they really that expensive? I bought two in November of 06 and paid $269 and $239.

    Rich
     
  10. yuppers519

    yuppers519 Godfather

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    Aug 6, 2007
    I had to pay $200 at startup in october for the two d11's and two weeks later upgrade to hd for $399. But when i originally placed my order with direct of course the guy on the phone said by the end of the year every channel would be in hd, blah blah. of course i did'nt believe him. but i did order an hd reciever and a regular reciever and when the installer came the first time he brought the wrong box. direct told me to cancel the order but i did'nt want to go a week or 2 without tv. so i just had them hook it up. so a week later i called direct and wanted to upgrade to hd, and they said it would be 399 up front. so i called back 5 minutes later, different csr and she was able to send out an installer 6 days later and bill it to my account. so all together had to pay 599 for startup
     
  11. K4SMX

    K4SMX Hall Of Fame

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    In an earlier incarnation I was employed in a management position by a now infamous international accounting firm which was, long after my departure, eliminated from the business landscape by the U.S. Government, renowned for it's own straightforward accounting practices.

    If the accounting for leased versus owned receivers was revealed to have been improperly stated and it was considered by the auditors to be a material issue to previously released financial statements, the statements would have to be restated. Materiality is the issue.

    In the case of civil lawsuits, it is quite common for defendants to be required to provide all sorts of additional accounting data requiring professional outside accounting firms as directed by the court. If the judge directs the defendant to provide information to the court which details the number of leased versus owned receivers over a specific time period, you can rest assured that all that data will have to be properly analyzed and submitted. In that connection, you'd think it would be in DirecTV's interest to reclassify as many receivers as possible from "leased" to "owned."

    Properly accounting for this equipment at the state use tax level is an entirely separate matter, and while no doubt immaterial to the overall financial statements, is always subject to challenge by individual state governments, while they're also greedily collecting their "DBS taxes" from individual consumers.
     
  12. Mar 1, 2008 #312 of 392
    Bushwacr

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    The statements are signed off by Deloitte Touche in the 10K. There should be no question if they are audited it's sitting in the docs.

    As to point two I would hope so. But audits are like anything else; good staffs do a better job. Given the change in accounting policy 3/1/06 I would assume that a close look was taken since that is like a frikkin' beacon to an auditor that says come test me.

    FYI I was in that line of work in a prior life. LOL
     
  13. Mar 1, 2008 #313 of 392
    m4p

    m4p Legend

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    In this case, I think they should note your account so that if you do move again and are able to get a signal, then they should give you the equipment without having to pay for it.
     
  14. Mar 1, 2008 #314 of 392
    Rich

    Rich DBSTalk Club DBSTalk Club

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    Thanx Stew, by the way, what are you in this incarnation? Good word, well used.

    Rich

     
  15. Mar 1, 2008 #315 of 392
    Rich

    Rich DBSTalk Club DBSTalk Club

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    Oh yeah, that will happen. In our dreams. Thanx for the chuckle. I mean no offense, by the way.

    Rich
     
  16. Mar 1, 2008 #316 of 392
    Rich

    Rich DBSTalk Club DBSTalk Club

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    Two questions:

    Am I correct in assuming that the lawsuit will cause a reaudit of all financial statements since leasing began?

    What do you do in your present life? Or incarnation, as Stew so aptly put it. Just curious.

    Rich
     
  17. Mar 1, 2008 #317 of 392
    Rich

    Rich DBSTalk Club DBSTalk Club

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    One more question: Have you ever gone "bushwhacking"? I have and enjoyed myself immensely.

    Rich
     
  18. Mar 1, 2008 #318 of 392
    Rich

    Rich DBSTalk Club DBSTalk Club

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    Personally, I hope D* skates on this. But I am a pessimist and always look a the worst case scenario. Makes me happy when I am wrong. I also hope this has no bearing on the takeover by Liberty. I would like to see a better management group in place.

    Rich
     
  19. Mar 1, 2008 #319 of 392
    Bushwacr

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    I doubt there will be a reaudit. I don't see the suit involving accounting principles but contract law.

    The attorney website says they want the "lease" ruled invalid and all lease fees returned. If the lease IS ruled invalid I would hope D* can run a report as to what customers paid how much and cut checks. Then the financials will be restated, the SEC will be honked off and the shareholders will get their chance if the stock price goes down. Not mentioned is what happens to subs that already returned their equipment.

    FWIW the law firm seems to like taking on big companies. This suit could be interesting to watch because state regulators love to hammer lessors.

    As to what I do, not much. LOL We have enough money to be retired and get too bored so I do accounting and finance contract work. It pays for my toys. My present toy project is to stream HD from my computer dvr to the TV downstairs. Hey ya gotta do something !
     
  20. Mar 1, 2008 #320 of 392
    Bushwacr

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    Hmmm ..... not sure how to answer this. LOL The wife actually gave me this nic many, many years ago.

    The reason it's 8 characters long is to fit the old DOS limits.
     
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