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DirecTV, NRTC End Exclusive Deal; Pegasus Balks

6/02/2004 6:38 AM Eastern

The National Rural Telecommunications Cooperative no longer has the exclusive rights to distribute DirecTV Inc.’s direct-broadcast satellite service in its territories, the two parties announced Wednesday.

The NRTC had held those exclusive rights since 1994.

As a result of Wednesday’s announcement, the NRTC's separate agreements with its members and affiliates, including Pegasus Communications Corp., have been terminated effective Aug. 31.

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.

Pegasus reacted swiftly to Wednesday’s announcement.

“We are still evaluating the notice purporting to terminate our agreements and a related cash offer, which we received this morning with no prior notification,” president and chief operating officer Ted S. Lodge said in a prepared statement.

“We categorically reject DirecTV's and the NRTC's assertion that they can terminate our agreements, and we intend to vigorously protect our rights,” he added. “We believe the strong-arm tactics demonstrated by these actions today further evidence both the true value of our assets and the very strong desire of DirecTV and the NRTC to take value away from our stakeholders.”

DirecTV and the NRTC agreed to enter into a new relationship that will allow NRTC members aside from Pegasus to participate as nonexclusive DirecTV retailers and service providers.

“We believe that terminating the NRTC's exclusive distribution agreement is in the best interest of consumers and all parties involved," DirecTV executive vice president of sales, distribution and business development Steve Cox said in a prepared statement.

"With the settlement of the disputes with the NRTC and its members last year by mutual agreement and the subsequent successful conclusion of DirecTV's litigation with NRTC affiliate Pegasus, the time was right for the NRTC and DirecTV to reach this new agreement,” he added.

 

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