3 ms·

I doubt you'd get very far with that. They lied about their plans to raise prices, but that in general is a good thing for shareholders. It's just that in this

I doubt you'd get very far with that. They lied about their plans to raise prices, but that in general is a good thing for shareholders. It's just that in this particular case they failed to understand the concept of price elasticity of demand and potentially did harm to the company.

shoo 7y ago
> AT&T's total number of video subscribers dropped from 25.4 million in Q2 2108 to 22.9 million in Q2 2019. If they've hiked the prices by at least 10% in preceding years without losing many customers then they're about even terms of revenue and may be more profitable
- ineedasername 7y ago
  Well, not quite, or not definitively. It depends on which subscribers they've lost. If the 10% lost subscribers represented higher paying (as in gold package) more profitable subscribers, meaning the 10% increase hit more lower paying customers, then they've got a net loss. In short, the 10% of lost subscribers may have accounted for more than 10% of their revenue.
ineedasername 7y ago
They lied about their plans to raise prices, and raising prices has caused a problem. The lie, combined with their error in judging price elasticity, is enough to represent a material harm to shareholders who could not act with accurate information. Perhaps given knowledge of a price hike they would have sold, anticipating subscriber loss. Or maybe not. The fact is they were lied to, and denied the opportunity to act on accurate information. There's enough meat in that for an activist investors lawsuit on grounds of securities fraud. Even without a material loss, lying to investors is fertile ground for a suit.
- ddingus 7y ago
  Solid. I wish someone would take this path.
- vijayr02 7y ago
  Surely their legal argument would be: we intended at that time to cut prices. Events in the market since then have forced us (unwillingly and with great regret; tears in our eyes even) to revisit this decision and raise prices?
  - ineedasername 7y ago
    It doesn't natter. At some point, they changed their mind and didn't disclose it to investors. The investor suit would point out that when plans changed, investors were not notified and therefore were denied the opportunity to act on information that represented a risk to their investment. Public corporations are required to disclose risks. This is partly where Matt Levine's "everything is securities fraud" line of thinking comes from. The argument is that they knew, or should have known, that there was a risk, and risks must be disclosed.

shoo 7y ago

> AT&T's total number of video subscribers dropped from 25.4 million in Q2 2108 to 22.9 million in Q2 2019. If they've hiked the prices by at least 10% in preceding years without losing many customers then they're about even terms of revenue and may be more profitable

ineedasername 7y ago
Well, not quite, or not definitively. It depends on which subscribers they've lost. If the 10% lost subscribers represented higher paying (as in gold package) more profitable subscribers, meaning the 10% increase hit more lower paying customers, then they've got a net loss. In short, the 10% of lost subscribers may have accounted for more than 10% of their revenue.

ineedasername 7y ago

They lied about their plans to raise prices, and raising prices has caused a problem. The lie, combined with their error in judging price elasticity, is enough to represent a material harm to shareholders who could not act with accurate information. Perhaps given knowledge of a price hike they would have sold, anticipating subscriber loss. Or maybe not. The fact is they were lied to, and denied the opportunity to act on accurate information. There's enough meat in that for an activist investors lawsuit on grounds of securities fraud. Even without a material loss, lying to investors is fertile ground for a suit.

ddingus 7y ago
Solid. I wish someone would take this path.
vijayr02 7y ago
Surely their legal argument would be: we intended at that time to cut prices. Events in the market since then have forced us (unwillingly and with great regret; tears in our eyes even) to revisit this decision and raise prices?
- ineedasername 7y ago
  It doesn't natter. At some point, they changed their mind and didn't disclose it to investors. The investor suit would point out that when plans changed, investors were not notified and therefore were denied the opportunity to act on information that represented a risk to their investment. Public corporations are required to disclose risks. This is partly where Matt Levine's "everything is securities fraud" line of thinking comes from. The argument is that they knew, or should have known, that there was a risk, and risks must be disclosed.