DISH Network and DIRECTV File Suit in Kentucky Challenging Constitutionality of Satellite Tax
FOR IMMEDIATE RELEASE
Contact: Bob Marsocci, DIRECTV, Inc., (310) 726-4656
Steve Caulk, EchoStar Communications Corp., (303) 723-2010
Protecting Satellite TV Subscribers, DISH Network and DIRECTV File Suit in Kentucky Challenging Constitutionality of Satellite Tax
Suit Claims Discrimination Against Satellite TV Subscribers While Local Cable is Given Favorable Tax Treatment
ENGLEWOOD, Colo., and EL SEGUNDO, Calif., May 5, 2005 - 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 tax."
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 aggressively 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 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, the Cyclone Design logo 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 www.dishnetwork.com or call 1-800-333-DISH (3474).