News

Settlement Ruling Boosts Pegasus Stock

11/23/2003 7:00 PM Eastern

After surging more than 10% ($2.21) Nov. 14 — the day a federal court ruled that it did not have to abide by the terms of a proposed settlement with the National Rural Telecommunications Cooperative and DirecTV Inc. — Pegasus stock fell back nearly $3 as investors apparently decided the time was right for profit-taking.

Pegasus stock has swung wildly over the past few months — it was up more than 40% ($5.76 per share) last month, when it announced a $300 million term loan that would replace an earlier credit facility.

The DirecTV-NRTC dispute has been festering for months. Pegasus, which resells DirecTV service, is the largest member of the NRTC, controlling more than 85% of its subscribers. But Pegasus balked at the original settlement reached in August, claiming the agreement was unfavorable to its business. Among other things, the settlement would have given DirecTV the right to purchase NRTC subscribers for $150 each in 2011 — a fraction of the value Pegasus puts on those customers.

Pegasus is still bleeding subscribers and reported disappointing third-quarter results.

September