Pegasus Counters DirecTV/NRTC with Chapter 11

Pegasus Communications Corp. said Thursday that its subsidiaries have filed for Chapter 11 bankruptcy protection.

The company’s move was a response to Wednesday’s announcement that the National Rural Telecommunications Cooperative no longer has the exclusive rights to distribute DirecTV Inc.’s direct-broadcast satellite service in its territories, which terminated Pegasus’ exclusive agreements, as well.

“Action this morning by the NRTC and DirecTV that purports to terminate our long-standing agreements is unlawful,” Pegasus chairman and CEO Mark Pagon said in a prepared statement.

“We intend to take all appropriate actions necessary to prevent the NRTC and DirecTV from implementing this latest scheme to deprive our stakeholders of the substantial value that we have successfully created in our satellite-television business since 1994,” he added.

“It is with the greatest reluctance that we have concluded that Pegasus Satellite Television must seek the protection of Chapter 11 in order to protect our customers, employees, business partners, creditors and owners while we seek affirmation of our rights,” Pagon continued. “We intend to pursue a resolution of these matters as expeditiously as possible."

A federal jury awarded DirecTV $51.5 million in damages from Pegasus in April regarding a lawsuit Pegasus filed claiming that DirecTV breached a joint marketing contract. Then in May, a federal district court judge granted DirecTV’s motions to eliminate all remaining claims against it by Pegasus and Golden Sky Systems Inc. in the parties’ four-year-old lawsuit.