GTE Florida Sues Home Shopping Network
In response to a year-old damage claim from Home Shopping Network, GTE Florida Inc. filed a countersuit Tuesday charging the cable shopping service and its two principal shareholders with business libel and slander.
The counterclaim filed in Pinellas Circuit Court answers a $1.5-billion civil suit that HSN brought against the telephone company in September, 1987.
Nando DiFilippo, HSN’s executive vice president and general counsel, said the GTE counterclaim was without merit.
In the suit seeking unspecified money damages, GTE said HSN erroneously has blamed the telephone company for financial problems and continues to blame the phone company long after switching to a different telecommunications supplier.
Drop in Earnings
GTE Florida, which filed the countersuit along with its subsidiary, GTE Communications Corp., called the HSN suit a sham and charged that the television retailer and shareholders Roy Speer and Bud Paxson “have repeatedly made false public statements about defendants . . . as part of a scheme to mask HSN’s poor market and financial performance and to conceal the true nature of HSN’s problems.”
HSN’s fourth-quarter financial report, released Oct. 18, indicated a 39% drop in earnings for fiscal year 1988. HSN attributed the decline to alleged telephone problems 15 months after HSN switched to different suppliers, GTE said.
“HSN continues to face financial and management problems in 1988,” the suit said. “HSN, Speer and Paxson continue to blame the defendants for HSN’s problems. In fact, however, the reasons why HSN’s performance has remained disappointing are numerous and unrelated to GTE Florida or GTECC.”
GTE claimed the real causes of HSN’s failure to meet projections cited in a 79-page pleading are overexpansion, unbridled growth, over burdened debt, overpayment for assets including UHF stations, competition, customer dissatisfaction, high merchandise return rates, understaffing, inadequate facilities and a loss of credibility in the investment and financial communities.”
“As our claim states, GTE Florida and GTECC carried HSN through a period of phenomenal growth,” said James Carideo, vice president and general counsel of GTE Florida, “and without the service and equipment of GTE Florida and GTECC, HSN would not have achieved the sales record it has.”
Talks of Delay
Citing HSN’s rise in sales from $11.1 million in fiscal year 1985 to $582.1 million for fiscal 1987, GTE Florida’s counterclaim attributed the increase to the explosive growth in the number of telephone calls made by customers.
As early as 1986, both GTE Florida and American Telephone & Telegraph Co. began urging HSN to consider alternatives to GTE Florida’s public switched network, GTE charged, but HSN “substantially delayed implementing the advice.”
