Thursday, August 23, 2007

Satellite TV Ads Not Supported by Consumer, Installer Surveys

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A flawed consumer survey did not support an advertisement claiming that consumers preferred DIRECTV satellite television to cable, the federal district court in Chicago has ruled. And a survey of installers was not sufficiently reliable to support another ad's clear implication that installers preferred DIRECTV over digital cable, the court held. Thus, DIRECTV was ordered to stop running both ads.

Consumer Survey

Participants in the consumer survey were not told that the DIRECTV signal was digital, but the cable signal was analog. Evidence was uncontradicted that digital signals were better than analog signals. Predictably, consumers responded that the digital signal was better.

“It is not easy to think of a test that could be more unfairly designed than the consumer survey run by [advertising information provider] TNS in this case,” the court said.

For DIRECTV to have run ads saying that consumers preferred DIRECTV over cable—without telling the public that their comparison was between digital and analog signals rather than between digital satellite and digital cable—was obviously a misleading representation, the court concluded. The likelihood that cable TV provider Comcast would prevail on its Lanham Act false advertising claims was found to be “overwhelming.”

Installer’s Survey

In addition, Comcast was held to be very likely to prevail on its claim attacking the advertisement based on the installer’s survey.

DIRECTV advertised that installers preferred DIRECTV picture quality four to one over cable, based on a survey that asked for a comparison between DIRECTV and cable without specifying digital cable. The installers would have been just as likely to respond based upon their experience with analog cable as any experience they might have had with digital cable, the court found.

The basic infirmity of the survey was the failure to ask a fair question, the court observed. The question should have been, “based on your experience as an installer, do you have a preference as between the picture afforded by satellite digital or cable digital.”

The problem might have been avoided or mitigated if the survey firm, Alliance Consulting Group, had screened the installers to make sure they were getting installers who had experience with both satellite digital (that is, DIRECTV) and cable digital. But Alliance did not do that, according to the court.

While some of the installers could have interpreted the question to mean DIRECTV digital versus cable digital, and answered on that basis, that hypothesis was thrown into doubt. There was absolutely no basis for anyone to think that there was a difference between an analog and a digital picture other than the fact that one is digital, the court noted. There was no evidence that satellite as such was better than cable. The fact that the installers favored DIRECTV four to one strongly suggested that they were responding on the basis of their experience with DIRECTV's digital signal versus analog cable.

Injunction Against Claims

DIRECTV was preliminarily enjoined, in any territory in which Comcast provides cable television service, from disseminating any advertising claims that rely upon, quote from, or are based to any extent on the two surveys.

While DIRECTV had ceased airing the advertisement based on TNS consumer survey, equitable relief was found appropriate because DIRECTV had not clearly disavowed any intention to resume the allegedly unfair conduct in the foreseeable future.

The August 15 hearing transcript and preliminary injunction order in DIRECTV v. Comcast of Illinois III, Inc., will be reported in CCH Trade Regulation Reports and CCH Advertising Law Guide.

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