Pegasus Outlines DBS Deal Concerns

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Supporting Founder
Sep 8, 2003
Las Vegas, Nevada
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Pegasus Communications sent a letter to Federal Communications Commission officials outlining concerns with News Corp.'s takeover of DirecTV and Hughes, with the main gripe being the potential abuses a News Corp.-controlled DirecTV could have in the multichannel business.

In the letter, addressed to FCC Media Bureau Chief Ken Ferree and others, Pegasus said the News Corp./FOX acquisition of a controlling stake in DirecTV could force the satellite TV provider to accept higher rates for FOX programming than it would if it was a separate entity. FOX then could use the rates charged to DirecTV as a reference point for its programming contracts with non-affiliated multichannel providers.

"DirecTV's competitors will then be faced with the choice to accept high and non-competitive pricing on their FOX programming or reject such pricing and be forced to compete against DirecTV without access to FOX programming," Pegasus' Kathleen Wallman said in the letter.

Pegasus asked the FCC to place a number of conditions on the proposed News Corp./DirecTV transaction, including a requirement that any contract between FOX and DirecTV be approved by a majority of independent directors of DirecTV and parent Hughes. The company also asked the FCC to require News Corp. and DirecTV to file all contracts between the satellite TV provider and FOX with the commission, and be made public.

The proposed conditions could also be applied to other areas affecting outside affiliate relationships, such as with deals tied to electronic programming guides and conditional access systems, Pegasus said.
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