DirecTV Latin America Files for Chapt. 11

reuters.com Tue March 18, 2003 09:58 AM ET

NEW YORK (Reuters) - Satellite television operator DirecTV Latin America LLC said on Tuesday it filed for Chapter 11 bankruptcy protection, as economic turmoil in the region forced the company to restructure its costs and debts.

DirecTV Latin America, the largest pay-television operator in Latin America, has been hammered by recessions and strife in Argentina, Venezuela and Brazil that have resulted in fewer subscribers.

The filing does not apply to the company's parent, Hughes Electronics Corp GMH.N , or to DirecTV Latin America's operating companies in Latin America and the Caribbean, which will continue regular business, the company said. Hughes is controlled by General Motors Corp GM.N .

DirecTV Latin America said it would ask the bankruptcy court to reject contracts that are "uneconomic and not in (the company's) best long-term interests," including a contract to broadcast the 2006 World Cup and a deal with Walt Disney DIS.N to carry the Disney Channel Latin America.

In the United States, Disney and Hughes are embroiled in a dispute over Disney's ABC Family Channel, with DirecTV threatening to drop the channel rather pay the 35 percent price increase that Disney is demanding.

DirecTV Latin America, owned in part by Latin American media conglomerates Cisneros Group and Grupo Clarin, said Hughes has agreed to provide $300 million in debtor-in-possession financing, subject to bankruptcy court approval. The filing was made in the U.S. Bankruptcy Court in Wilmington, Delaware.

DirecTV Latin America also said that Kevin McGrath has retired as chairman, and that Larry Chapman has been named president and chief operating officer, effective immediately.