Pegasus: DirecTV, NRTC Trying to Destroy Us

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Pegasus Communications Corp. subsidiary Pegasus Satellite Television Inc. filed a lawsuit late Monday against DirecTV Inc. and the National Rural Telecommunications Cooperative.

The suit -- an adversary complaint filed with the U.S. Bankruptcy Court for the District of Maine -- charged the defendants with “acting independently and in concert in an effort to destroy Pegasus and steal its business for their own enrichment in violation of substantial fiduciary, contractual and other duties owed to Pegasus.”

The complaint seeks actual and punitive damages, as well as rescission of various agreements entered into by the NRTC and DirecTV, including their purported termination June 1 of their direct-broadcast satellite distribution agreement and, by extension, Pegasus’ member agreements with the NRTC.

The complaint also seeks the appointment of a receiver to administer the NRTC.

“As the lawsuit makes clear, we believe that the NRTC and its officers and directors have engaged in a pattern of improper conduct that violates Pegasus' contractual rights, that constitutes a breach of the NRTC's and its officers' and directors' fiduciary duties and that violates settled principles governing cooperative associations,” Pegasus president Ted Lodge said in a prepared statement.

“At the same time, DirecTV has conspired with and aided and abetted the NRTC in this effort and has breached its own duties to Pegasus,” he added. “We believe the defendants have engaged in these unlawful activities in order to steal our business and divide the spoils amongst themselves.”

NRTC CEO Bob Phillips called the suit "absurd and unfounded," adding, "Pegasus continues its campaign to blame others for its own business failures and poor decision making."

On June 10, a federal judge in U.S. Bankruptcy Court in Portland, Maine, entered an order denying Pegasus’ request to prevent DirecTV from providing its DBS service directly to consumers in areas served by Pegasus Satellite Television.

On June 1, the NRTC announced that it no longer had the exclusive rights to distribute DirecTV’s DBS service in its territories, which terminated Pegasus’ exclusive agreements, as well.

And in April, a federal jury awarded DirecTV $51.5 million in damages from Pegasus 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.

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