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Pegasus reported improvements in some key financial metrics for the second quarter, but lost subscribers as it worked to refine its DBS business serving rural areas.

Pegasus said its focus on growing EBITDA and cash flow in the DBS business is making some headway. DBS EBITDA increased $42.1 million to $54.6 million during the second quarter. DBS free cash flow increased $35.8 million to $38.7 million. DBS net revenues increased $10.4 million, or 5 percent, to $216.4 million.

Pegasus executives said improvements in its DBS business is giving the company higher-quality subscribers, which reduces churn and bad debt. However, the effort also led to a net loss of customers during the three-month period. Pegasus reported a net loss of 5,500 subscribers for the quarter, leaving it with 1.375 million DirecTV customers in its rural territories, as of June 30.

During a conference call, CEO Mark Pagon commented on the company's decision to turn over operations of its Pegasus Express satellite broadband business to Earthlink. Pagon said in the current environment Pegasus Express "doesn't make sense for us," and added that the company is focusing on its future Ka-Band business.

Pegasus was awarded Ka-Band frequencies a year ago by the Federal Communications Commission. Pagon said Wednesday the company is meeting its FCC compliance deadlines.

Executives also said a trial date for litigation between Pegasus and DirecTV, concerning distribution of premium programming, has been moved to April. The delay was attributed to further discovery proceedings.

From SkyReport (Used with Permission)
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