DirecTV Latin America, which has a $400m contract with soccer governing body FIFA for the TV rights to the 2002 and 2006 World Cup in the region, excluding Brazil, formally declared itself bankrupt after incurring losses totalling over $1bn in the last two years.
In filing for bankruptcy, DirecTV LA cited the continued debilitating costs of its primary carriage deals such as the World Cup rights as the major reason for its financial instability.
The pay-TV platform has stated that it will request that the Delaware court with which it has filed its bankruptcy claim reject the long-term contracts with the likes of FIFA as part of the restructuring.
Should the court concur with DirecTV's view regarding the uneconomic status of the World Cup rights contract, the pay-TV platform will look to waiver the continued executory payments of the FIFA deal.
With the Latin American media sector in a significant state of disarray, FIFA will then be forced to negotiate new TV rights deals for the 2006 World Cup in the various countries in the region in a bid to recoup the lost money set to be incurred by DirecTV's demise.
Neither FIFA nor its rights holding agency Infront Sports & Media were available for comment when contacted by sportbusiness.com
Pan regional pay-TV platform DirecTV Latin America has filed for Chapter 11 bankruptcy leaving a major question mark over the future of the TV rights in the region to soccer's 2006 World Cup.
