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DirecTV Supports Video Tax Bill

Washington – A DirecTV executive on Thursday urged Congress to pass a bill that would bar states from taxing satellite TV services in an effort to create regulatory parity with cable companies.

Mike Palkovic, DirecTV’s executive vice president of operations, complained that some states had passed a satellite TV tax after agreeing that it would level the playing field with cable operators, which pay about 5% of their video revenue to local governments as franchise fees to occupy rights of way.

Palkovic argued that a satellite TV tax was totally different from a franchise fee.

“Franchise fees are not taxes. They're rent,” he said, adding that cable fees compensate local governments for use of a public asset.

Satellite TV providers, he said, do not occupy streets and conduits and shouldn’t pay franchise fees disguised as a tax.

“Should satellite companies pay franchise fees? Of course not,” Palkovic said.

Palkovic testified in support of the State Video Tax Fairness Act of 2007 (H.R. 3679), a two-sentence bill that would ban states from imposing discriminatory taxes on pay-TV providers. In other words, a DBS tax would apply to cable operators that also pay franchise fees.

At least six states have applied sales and other taxes on DirecTV and Dish Network customers.