GMH). After closing at $16.60 on the eve of the Hughes news, Pegasus' shares rose as high as $32.73 in early May. On Tuesday, Pegasus' stock fell $3.80 to close at $25.87. All of that decline came after a speech by News Corp. director Chase Carey at the investor meeting, held by the Satellite Broadcasting and Communications association. Carey, slated to become chief executive officer of Hughes after News Corp. gets its stake, said Pegasus' current share prices "defy the reality" of the cash flows on which the company should be valued. Certainly, News Corp. wants to do something about DirecTV's relationship with Pegasus, which has exclusive rights to distribute the direct broadcast satellite service in certain rural areas. While both DirecTV and rival DBS operator EchoStar Communications ( DISH) are reporting booming growth for the subscribers under their control, Pegasus has reported declining subscriber counts over more than a year. Both Carey and Murdoch expressed displeasure with Pegasus on a conference call following the announcement of the Hughes deal last month. "The Pegasus situation they have really is not something that works in the marketplace," said Carey at the time, according to a CCBN and FDCH e-Media transcript of the call. How News Corp. hopes to resolve the situation is unclear, and it would not necessarily be through a buyout. A morass of litigation involving Pegasus and News Corp. is scheduled to go to trial on June 3.