Pegasus Files for Chapter 11

[Gregg Lengling]

Pegasus Communications said its subsidiaries - Pegasus Satellite Television, Pegasus Satellite Communications and Pegasus Media and Communications - have filed for protection under Chapter 11 of the U.S. Bankruptcy Code.

The company said it made the move in order to prevent the National Rural Telecommunications Cooperative and DirecTV from seeking to implement what it called an unlawful termination of Pegasus Satellite Television's agreements for exclusive distribution of DirecTV services. The filings will seek affirmation by the Bankruptcy Court of Pegasus Satellite Television's rights as well as damages resulting from NRTC's and DirecTV's actions to impair those rights, including NRTC's breach of its duties to Pegasus Satellite Television, NRTC's majority owner, the company said in a statement.

Pegasus said it believes the filing will also enable it to continue to provide uninterrupted service to 1.1 million rural subscribers during the resolution of these disputes and to continue to meet its responsibilities to its employees and business partners in the ordinary course.

Mark Pagon, Chairman and CEO of Pegasus Communications, said, "We intend to take all appropriate actions necessary to prevent NRTC and DirecTV from implementing this latest scheme to deprive our stakeholders of the substantial value that we have successfully created in our satellite television business since 1994. It is with the greatest reluctance that we have concluded that Pegasus Satellite Television must seek the protection of Chapter 11 in order to protect our customers, employees, business partners, creditors and owners - while we seek affirmation of our rights. We intend to pursue a resolution of these matters as expeditiously as possible."