Pegasus lost its standing to bar DirecTV from directly marketing its Premium Services


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Sep 8, 2003
U.S. judge dismisses Pegasus, DirecTV Suits
Thu May 13, 2004 08:48 PM ET

By Gina Keating

LOS ANGELES, May 13 (Reuters) - A federal judge in Los Angeles has dismissed dueling lawsuits brought by DirecTV Group and Pegasus Communications Corp. against each other in a contract dispute over rural cable distribution, according to a court order made public on Thursday.

The decision by U.S. District Judge Lourdes Baird does not affect an existing $51.5 million jury verdict in DirecTV's favor entered against Pegasus on April 15, the company said.

Pegasus had demanded as much as $86 million in restitution related to the payment of "launch fees" paid by program providers to DirecTV, but the judge dismissed those claims.

The claims were all that remained of breach of contract lawsuits filed four years ago against DirecTV by Pegasus and the National Rural Telecommunications Cooperative, which helped fund the launch of the satellite that put DirecTV in business in the early 1990s.

Baird also terminated DirecTV's countersuit seeking to end Pegasus' exclusive right to distribute DirecTV to NRTC territories when the satellite falls from orbit, the order said.

The cases had been consolidated and scheduled for trial in August of 2003 when NRTC and DirecTV settled their dispute, leaving only Pegasus' claims against DirecTV, the order said.

DirecTV and the NRTC agreed that their contract, entitling NRTC to distribute DirecTV programming, would end when the DBS-1 satellite reaches the end of its life or June 30, 2008, whichever comes later.

At that time, DirecTV will have no further obligation through its contract with the NRTC to provide services to Pegasus, according to El Segundo, California-based DirecTV.

Dan Fawcett, DirecTV's executive vice president, said the company was pleased with the ruling. A spokeswoman for Bala Cynwyd, Pennsylvania-based Pegasus declined comment.

In her ruling, Baird found that Pegasus no longer had standing to bring claims against DirecTV because it was not a party to its contract with the NRTC.

Pegasus had a member agreement with the NRTC to market and sell DirecTV to the rural communities who formed the NRTC cooperative.

Similarly, Baird dismissed DirecTV's counterclaims against Pegasus because it was not a party to Pegasus' agreement with NRTC.

But she upheld her earlier denial of $86 million in launch fees sought by Pegasus, saying the company's contract entitled it only to a portion of the launch fees paid by DirecTV to NRTC -- fees that were never paid.

The judge also ruled that Pegasus lost its standing to bar DirecTV from directly marketing its Advanced and Premium services to subscribers in NRTC's territories as a result of the settlement between NRTC and DirecTV.

Rupert Murdoch's News Corp. Ltd. is now DirecTV's controlling shareholder.
Pegasus lost $5.39 on Friday or (27.18%) of its value on this news.
When supplyer begins to sell to the same territories the distributor does --- is there a chance left for the distributor?

As the result of earlier litigation, DTV controls access to the premium services formerly provided by USSB, i.e., HBO, Cinemax, Showtime etc. PGTV sells you the basic packages, local channels and the "normal" cable stuff.
I guess P* customers can get to enjoy dealing with two different companies for one satellite service again. . .
Their si no ;ove lost ehre but my understanding is that D* will sell premium services while Pegasus sells the basic service. Sort of like the old USSB days.

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