Provision of entertainment is merely incidental to cable operator...
Provision of entertainment is merely incidental to cable operator’s demonstrated function of transmitting clear, viewable signal, N.Y. State Supreme Court Appellate Div. ruled in overturning state Tax Appeals Tribunal’s finding that 2 state cable operators were taxed properly as…
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general business as opposed to transmission corporations. Acting on petition challenging tribunal’s finding by NewChannels and Upstate Community Antenna, court in 5-0 decision termed as “entirely irrational” tribunal’s conclusion that transmission was merely means by which cable operators conveyed their products to subscribers and therefore was incidental to their actual business of providing entertainment. Primary basis for tribunal’s conclusion that petitioner’s weren’t engaged in transmission business, court said, stemmed from its belief that focus of cable service wasn’t transmission of various signals but provision of entertainment. Court said record made plain that cable operators: (1) Have limited capacity to manipulate signals they capture from cable programmers and transmit to subscribers. (2) Have no control over content of signal received aside from getting “rid of ghosts,” clarify signal or amplify it. (3) Can’t dictate when or how many times particular program will be broadcast. (4) Can’t sell ads on local or premium channels they offer. With exception of local origination programming they are required to carry, petitioners offered no original programming, court said. NewChannels and Upstate Community Antenna filed suit after tribunal upheld state Dept. of Taxation & Finance decision to assess deficiencies against 2 companies on ground that they should have filed tax returns as general business corporation rather than transmission corporation.