America’s DirecTV Acquires Pegasus Subscribers for $875m

04 August 2004

The largest US satellite television provider DirecTV, now controlled by Rupert Murdoch's News Corporation, has paid out $875 million (€728m; £481m) for the right to acquire one million Pegasus Communications subscribers and sell its service directly to rural homes.

Pegasus, as a member of the National Rural Telecommunications Cooperative, previously held exclusive rights to provide DirecTV's service in rural areas. The revenue was then shared with DirecTV.

Amid claims that Pegasus customers paid more for the service than those buying directly through DirecTV, the satellite firm wants to control its own sales and customer service in rural areas, in the hope of reversing the trend of falling subscriber numbers and reaching 'every home in America', according to ceo Chase Carey.

But as Pegasus made 96% of its revenue in 2003 through sales of DirecTV's service, it was in no hurry to end the relationship. It filed for bankruptcy protection in June this year, asked the court to prevent the contract from being terminated, and sued both DirecTV and the NRTC.

Under the new deal, awaiting approval from the US Bankruptcy Court in Portland, Maine, both companies will drop all litigation.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff