PEGASUS-DIRECTV DISPUTE PLACED ON HOLD
Deadline for DirecTV’s threat to terminate programming distribution agreement with Pegasus Communications passed last week despite former’s claim that it was owed $6.2 million for subscribers gained outside latter’s exclusive sales territories. DirecTV, which had set Feb. 15 deadline for resolution of dispute covering 7,188 subscribers, said it was owed revenue collected from customers before they were transferred to its service area. Subscribers were split between Pegasus and Golden Sky, which Pegasus acquired in last year. DirecTV notified Pegasus of disputed revenue Jan. 15, Pegasus said in SEC filing.
Pegasus spokeswoman said dispute would be resolved as part of larger litigation involving companies that will be decided in trial scheduled to begin in Feb. 2002. DirecTV spokesman wasn’t available for comment. Pegasus and Golden Sky filed suit in Jan. 2000 claiming DirecTV had breached 1994 agreement by refusing to allow National Rural Telephone Cooperative (NRTC to sell premium service in its territories. Companies since have reached agreement that allows Pegasus to sell premium services in NRTC territories, but other issues remain. Among allegations is that DirecTV “coerced” Thomson and Hughes Network Systems (HNS) to provide satellite equipment for its dealers and threatened to cut off retailers and distributors that sold it for use in NRTC territories.
U.S. Dist. Judge Lourdes Baird, San Francisco, who is handling case, recently dismissed 2 motions by DirecTV for summary judgment in case. Among motions was one that sought finding that NRTC agreement didn’t include rights to more than 20 single channels of transponder capacity. In dismissing DirecTV motion, Baird said dispute over transponder capacity “sufficiently illustrates that there exists a genuine issue of material fact” as to DirecTV’s obligations under contract.
Hearing is set for April 9 on proposed settlement of class action suit that claimed DirecTV and Primetime 24 “falsely advertised and misrepresented” availability of local programming. Lead plaintiff Terry Brauer and others involved had local channel service shut down in 1998-1999 by DirecTV to ensure compliance with Satellite Home Viewer Act, which limited number of households that could receive local channels via satellite. DirecTV later resolved dispute with broadcasters and FCC and currently is providing local-into-local service in 41 markets.
Under terms of settlement, subscribers involved in suit will receive 2 free months of 9-channel Showtime/The Movie Channel package. Whether subscriber qualifies for settlement will depend on how many programming services were received before interruption, number of services that could be reconnected and whether market subscriber lived in gets DirecTV’s local channel service. DirecTV also will pay $1 million toward attorney fees and costs and Bauer will get $2,500 for his contribution to settlement.