DirecTV Files 2-Count Suit Vs Pegasus Commun, Subs

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DirecTV Files 2-Count Suit Vs Pegasus Commun, Subs

DirecTV Inc. (DTV) filed a lawsuit against Pegasus Communications Corp. (PGTV) in connection with the termination of distribution deals with the National Rural Telecommunications Cooperative, Pegasus said Thursday.

DirecTV filed the two-count complaint against the company and its subsidiaries Wednesday in the U.S. District Court, Central District of California, Pegasus Communications said in a document filed with the Securities and Exchange Commission.

The first count relates to federal trademark infringement based on use of the DirecTV brand name after Aug. 31, when a 90-day license that allowed the NRTC to use the DirecTV name will expire.

According to the SEC filing, the second claim is for breach of contract and is based on an alleged failure of the defendants to fulfill their "best efforts" obligations under Pegasus Satellite Television's agreements with the NRTC.

A Pegasus spokesman told Dow Jones Newswires Thursday that the company expects all issues related to the NRTC distribution agreements to be handled through its bankruptcy proceeding.

As reported Wednesday, Pegasus' satellite-television unit filed for bankruptcy protection after DirecTV ended a deal under which Pegasus distributed the DirecTV satellite television service in rural areas.

DirecTV has maintained an exclusive contract with the NRTC under which rural companies offered DirecTV's services. DirecTV said Wednesday that it was ending its contract with NRTC, and it offered the local companies the option of selling their subscriptions to DirecTV or negotiating a new deal.

Pegasus Satellite, the co-op's largest affiliate, was excluded from the offer. Pegasus was offered only a buyout at a lower payment per subscriber.

The termination announcement follows years of litigation among DirecTV, NRTC and Pegasus involving various contractual issues.

Later Thursday, a DirecTV spokesman said that the lawsuit was part of its original plan when it decided to end the deal with the NRTC and "in no way" was done in response to Pegasus Satellite's bankruptcy filing late Wednesday.
 
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