Satellite TV Providers Challenge Law

DirecTV and EchoStar Communications [NYSE: DISH] have filed a lawsuit against Tennessee’s Commissioner of Revenue that challenges the sales tax imposed on direct broadcast satellite (DBS) customers. The sales tax is not imposed equally on local cable television customers, even though satellite television companies compete with incumbent cable operators in the same market, the companies argued. Tennessee imposes an 8.25 percent sales tax on a DBS customers’ monthly subscription fees, whereas customers of cable operators are exempted from the tax on the first $15 of their subscription fees. The result is a higher tax on satellite customers than on the customers of competing cable companies, the DBS providers said.