DirecTV, Pegasus get court date

Judge sets June 3 trial if no settlement reached

A court ruling on lawsuits between dueling satcasters DirecTV and Pegasus Communications had both sides claiming victory as they head to court next month.

Pegasus, which distributes DirecTV service to 1.2 million subscribers, has emerged as a major thorn in the side of the nation’s largest satellite provider ahead of a proposed merger with News Corp.

Pegasus, along with the National Rural Telecommunications Cooperative, is suing DirecTV for breach of contract. It wants to extend the term of the DirecTV contract and claims it has a right of first refusal when the contract expires.

Judge rules

Late Thursday, a judge in Los Angeles Federal District Court dumped some of Pegasus’ claims outright and raised the bar on its ability to collect punitive and compensatory damages. DirecTV general counsel Robert Hall said the decision puts to rest speculation that Pegasus and NRTC members could recover more than $150 million in damages from DirecTV.

DirecTV has countered on some of the issues and filed a separate, $50 million lawsuit accusing Pegasus of breaching a joint marketing agreement. The two sides are currently in mediation on the suits. The judge set a June 3 trial date if no settlement is reached.

Going to jury?

Bala Cynwd-based Pegasus expressed satisfaction Friday that the issues would reach a jury trial.

The lawsuits mostly involve disputes over the nature and extent of rights stemming from a 1992 contract allowing NRTC to distribute certain services in specified mostly rural areas of the U.S. NRTC in turn contracted with Pegasus to distribute the DirecTV signal.

DirecTV and News Corp. badly want Pegasus, which has been hurt by declining revenue and subscriber losses, to stop reselling DirecTV service in a number of markets. But that’s the foundation of Pegasus’ business, so it will certainly demand a fat pricetag to step back.

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