Dec

DirecTV’s Market Share May Be Hit Adversely by Controversy

Sophia Johnson Category

Financial gurus in the stock market are speculating that recent controversy about DirecTV having to pay $14 million to 50 states in America may adversely affect its market share in the stock market.

A two-year investigation into the subscription policies of the satellite company revealed that DirecTV was indulging in unethical business practices to drive profits. Thousands of customers across America reported that they were extremely disappointed by the satellite provider’s deceptive advertisements and hidden cancellation charges that the company did not give them any hints about. The result was a lawsuit with DirecTV asked to pay about $14 million as damages across 50 states.

A cursory look reveals that DirecTV’s market share growth has been quite strong so far. Its quarterly results for the third quarter of 2010 have been quite impressive and the company is gaining ground on new customers. Given the high brand recognition that the company has and its burgeoning subscriber base, it seems that the satellite provider has been doing quite well so far.

However, the recent lawsuit about the satellite provider’s malpractices and violation of consumer practices has led experts to predict that this controversy may hamper the market share growth of the company. Although $14 million is quite a small price to pay for the company given its total assets, the ruling can have a disastrous effect on the company’s reputation and brand image. This can have a domino effect on its shares in the stock market.

Given the present scenario, not all is well with the company and it remains to be seen how significant an effect this might have on the satellite provider’s market value.