TELECOM Digest OnLine - Sorted: Re: DirecTV Not Honoring Tivo Lifetime Service

Re: DirecTV Not Honoring Tivo Lifetime Service

William Van Hefner (
Tue, 21 Dec 2004 17:34:15 -0800

> If Pegasus was purchased by DirecTV, then the legal complaint
> is with DirecTV -- If DirecTV purchased Pegasus without being
> aware of Pegasus' liabilities, that's their fault, and maybe
> next time they'll perform due diligence before making a
> corporate acquisition.

The whole affair between Pegasus, DirecTV and TiVo is actually a quite
messy situation. In a nutshell, Pegasus had a contract at one time to
be a distributor of DirecTV programming. Pegasus signed-up customers
in rural areas and was paid a regular commission each month by DirecTV
for doing so.

At some point, DirecTV decided that it wanted to terminate the Pegasus
contract. Since these commissions constituted Pegasus' chief form of
income, they fought the issue in court. The decision was a complicated
one, but what DirecTV ended up doing was basically taking over
Pegasus' entire customer base and keep the monthly commissions for
themselves. Pegasus is now in deep doo-doo and I believe that they
will now very likely go out of business.

I am not sure whether DirecTV did direct billing of "Pegasus
customers" from the beginning, or whether Pegasus itself acted as a
rebiller, but as DirecTV sees it, these customers paid Pegasus the
lifetime subscription money for the TiVo service, and not
them. Exactly how much of this "lifetime subscription" was passed
through to DirecTV from Pegasus is unknown, but it certainly was not
100%, as DirecTV would have liked it.

DirecTV -USED- to offer TiVo service, which was completely driven by
TiVo's software and proprietary programming. Now when you buy a
DirecTV receiver with DVR capabilities, you get "DirecTV DVR service
powered by TiVo". This is basically DirecTV's way of severing their
exclusive deal with TiVo, and will allow them in the future to do away
with TiVo as a middleman altogether. Therefore, DirecTV viewers are
not really getting TiVo service directly anymore. They are just
getting a repackaged form of the service, and DirecTV may do-away with
TiVo's service at any time. DVR technology is now so standard that
companies like DirecTV no longer need companies like TiVo. They can do
everything themselves.

This begs the question, exactly how much of this "lifetime"
subscription was passed on from Pegasus to DirecTV, and in turn, how
much of the subscription was passed on from DirecTV to TiVo? Nobody
really knows, as these were all private agreements. For its part,
Pegasus has (VERY unwillingly) been cut out of the loop. It can't do a
thing, even if it actually has the money to give back (it
doesn't). DirecTV will likely claim that it was not the one paid for
the lifetime subscription, and has no obligation to fulfill Pegasus'
promises. It did NOT buy Pegasus. It only cannibalized its customer
base. And TiVo? Well, they would be happy to provide the lifetime
service, I'm sure. Only thing is, the subscription is tied to the
receiver (NOT the owner) and DirecTV no longer offers TiVo service.

This whole fiasco reminds me of the Abbott & Costello "Who's On First"
sketch. Everyone is denying responsibility. IMHO, DirecTV made a
killing from taking over the Pegasus customer base, and should honor
the deal. Whether or not they are legally obligated to do so though
is another question.

William Van Hefner
Editor - TheDigest.Com

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