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Supremes Won't Hear Satellite Tax Challenge

In a victory for cable operators, the Supreme Court has denied an appeal by DirecTV and Dish of an Ohio tax on satellite service not applied to cable operators. The lower courts ruled that it was not unconstitutional for Ohio to use the difference in transmission to impose a tax on satellite service that it did not levy on cable.

The tax was imposed nine years ago this month, and DirecTV and Dish almost immediately took it to court, saying that the state had imposed a "discriminatory and unfair tax policy that disenfranchises consumers, and our customers, while benefiting local cable operators."

Operators have also challenged similar taxes in North Carolina, Utah and Massachusetts.

Cable companies have lobbied for DBS-only taxes, arguing that they level the playing field given the local franchise fees cable ops pay, while satellite operators point out they do not put any burden on local infrastructure.

The DirecTV challenge wound its way through several courts before the Ohio State Supreme Court back in 2010 upheld the satellite tax, saying it was not unconstitutional because the disparate treatment was based on differences between the businesses -- method of transmission -- rather than their location or activities.

The satellite companies challenged that interpretation, as well as the conclusion that there could be no violation of the Commerce Clause where both the beneficiaries and victims are major interstate enterprises.

Had the court taken the case, it could have called into question similar taxes based on similar distinctions in a number of other states.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.