DIRECTV to Acquire Assets of Pegasus Satellite Television; Agreement Will Enhance Competition in Rural America

EL SEGUNDO, Calif., Aug. 2/Satnews Daily/ — The DirecTV Group, Inc. (NYSE: DTV) has reached an agreement to purchase the primary direct broadcast satellite assets of Pegasus Satellite Television, Inc., including rights to all DirecTV subscribers activated through Pegasus.

DirecTV will pay $875 million in cash, subject to the full satisfaction and the dismissal of all claims between the parties, including the $63 million judgment entered in May in favor of DirecTV against Pegasus. Taking into account this judgment, the aggregate purchase price is approximately $938 million.

The agreement has been approved by the creditors' committee in Pegasus' Chapter 11 proceedings.

The transaction is expected to be completed within the next four to six weeks, subject to the approval of the U.S. Bankruptcy Court in Portland, Maine. DirecTV expects that the bankruptcy court hearing to approve the transaction will be held in late August. DirecTV also expects to complete the migration of Pegasus customers to DirecTV within 30 to 45 days thereafter.

Pegasus provides DirecTV programming to rural areas in 41 states nationwide. Pegasus had about 1.08 million customers as of June 1, 2004. However, Pegasus and its subsidiaries, including Pegasus Satellite Television, Inc., filed a voluntary petition for relief under Chapter 11 of the U.S. bankruptcy code on June 2, 2004.

Chase Carey, president and CEO of DirecTV Group, said the agreement gives DirecTV a true ability to reach every home in America. “DirecTV will have unencumbered access to an additional 10 million households and will be able to offer consumers in those rural markets the full benefits of DirecTV (R) programming, pricing and service,” he said.

DirecTV hopes that with the deal, its subscribers in rural areas will again rise after a steady decline in the last few years. This transaction also has significant financial benefits, such as increase in short-term cash flow and long-term value from both increased subscribers and cash flow.

"The transition will be seamless and there will be communications with Pegasus customers to provide them with information about this transaction, as well as the planned migration process," said Carey.