ENGLEWOOD, Colo. and EL SEGUNDO, Calif., May 6 – LAWFUEL – The Law News Network — Defending the rights of hundreds of thousands of satellite TV subscribers in
Kentucky, DIRECTV Inc., and EchoStar Communications Corporation and its DISH
Network, the leading providers of satellite TV service in the nation, have
filed suit in the U.S. District Court for the Eastern District of Kentucky,
challenging the constitutionality of provisions of a tax law enacted last
month that would impose discriminatory taxes against satellite TV services in
favor of competing services sold by cable television companies.
“This lawsuit is about protecting our customers — many of whom dropped
cable for satellite television — throughout the state of Kentucky,” said Mike
Palkovic, chief financial officer, DIRECTV, Inc. “Why should they be
penalized for choosing the only viable choice to cable? Imposing a statewide
tax on satellite TV companies discriminates against interstate commerce in
violation of the Commerce Clause of the U.S. Constitution. Beyond the legal
implications, this new law is simply unfair to Kentucky consumers who
subscribe to satellite television, since they will bear the brunt of this new
The new law superficially imposes the same rate of excise and gross
revenue taxes on satellite companies as it does on cable; but in reality,
satellite companies will be taxed at a substantially higher rate than their
cable counterparts. Cable companies are using their local franchise fees — a
simple cost of doing business that gives them the right to tear up city
streets and use utility poles — to offset the cable companies’ overall tax
obligation. Satellite companies, in contrast, pay the full amount of the tax,
without any offsets. The result is added expense for satellite customers,
compared with cable customers.
“Satellite TV provides an affordable alternative to rising cable rates in
states where the two services compete on a level playing field,” said David
Rayner, chief financial officer for EchoStar. “Kentucky residents will have
less robust competition in the pay-TV marketplace as a result of the
cable-sponsored special tax recently placed on satellite service. We will
continue to oppose unconstitutional and anti-consumer laws that put satellite
at a competitive disadvantage to cable.”
While the majority of states do not discriminate between the taxation of
satellite and cable television services, a handful of states have attempted to
pass satellite tax legislation — usually with little success. The satellite
television industry has aggressi ely pursued legal action against states
imposing discriminatory taxes. DISH Network and DIRECTV encourage their
customers and the hundreds of retailers in the state to contact the state
agencies and legislators to voice their disapproval. Satellite TV subscribers
across the country can visit http://www.stopsatellitetax.com for more information on
how to stop unfair satellite TV taxes in their state.
About DIRECTV, Inc.
DIRECTV is the nation’s leading and fastest-growing digital television
service provider with 14.4 million customers. DIRECTV and the Cyclone Design
are registered trademarks of DIRECTV, Inc. DIRECTV (NYSE: DTV), a
world-leading provider of digital multichannel television entertainment
services, is approximately 34 percent owned by News Corporation Ltd.
EchoStar Communications Corporation serves more than 11.2 million
satellite TV customers through its DISH Network(TM), the fastest growing U.S.
provider of advanced digital television services in the last five years. DISH
Network offers hundreds of video and audio channels, Interactive TV, HDTV,
sports and international programming, together with professional installation
and 24-hour customer service. DISH Network ranks No. 1 in Customer
Satisfaction among Cable/Satellite TV Subscribers by J.D. Power and
Associates. Visit EchoStar’s DISH Network at http://www.dishnetwork.com or call
Contact: Bob Marsocci Steve Caulk
DIRECTV, Inc. EchoStar Communications Corp.
(310) 726-4656 (303) 723-2010
Web Site: http://www.stopsatellitetax.com