DISH and DIRECTV, two separate companies providing satellite programming to customers nationwide, both faced a significant challenge when the issue of sales tax on services surfaced in Michigan. Regardless of differences in pricing, programming packages, and customer service, all television providers in Michigan would be affected by the tax, yet satellite providers would take the hardest hit.
As a result of the differences in infrastructures used to support their television programming services, cable companies and satellite companies are set up in ways that cause them to pay different fees. Under the new sales tax on services, cable companies would receive a lesser impact—only one percent tax—and satellite companies would receive a heftier tax at six percent. Not surprisingly, cable companies didn’t oppose the new tax because it would reduce satellite television’s competitive edge. This is where MLC stepped in.
Whether the paid services tax was passed or not wasn’t the issue MLC sought to address for satellite providers. Instead, MLC set out to lobby for the exclusion of the entire paid television industry from falling into the new tax category. Since satellite companies aren’t historically taxed on a state level, DISH and DIRECTV had a very minor presence at the Capitol and far fewer connections when compared to their cable company counterparts. MLC knew that the biggest challenge would be competing with cable’s many corporate representatives and state-level lobbyists.
Knowing that cable companies have more resources and a larger presence at the Capitol, it was important for MLC, and for Tim Ward at the helm of the project, to provide the counsel and campaign strategy needed to overcome these obstacles. A major component to fighting the legislation was driving action among satellite television customers, which was made possible through both DIRECTV and DISH services. By reaching out to subscribers, DISH and DIRECTV activated a grassroots outreach program through a dedicated television channel and phone program urging subscribers to contact their legislators.
By utilizing a thoughtfully crafted campaign and the client’s resources, MLC successfully fought to exclude paid television services from being taxed at the state level. MLC’s many years of experience in Lansing has unbeatable benefits, including a keen sense of which legislators will support each campaign. Understanding what motivates them can be an enormous advantage for gaining constituents that will stand by—and fight for—your cause.
For every price increase experienced by customers as a result of tax increase, business is lost. If the fight was unsuccessful, DISH, DIRECTV and other satellite TV providers would have experienced losses in customers and overall business. Had the tax proposal passed, satellite customers would have incurred charges on their bills created by the new multi-million dollar tax liability, undoubtedly resulting in charges that would impact customers’ choices on TV providers. From the bigger picture point of view, this victory was important not only for this case, but for future satellite taxation cases as well. If paid television services weren’t excluded from this tax, it would have legitimized the concept of state-level taxing on satellite television and would have given cable companies the power to set the precedent for future legislation.
For more information on how MLC can fight for your company in Michigan, reach out to us here.
“Working with MLC proved to be one of the most important decisions we made for the success of our business in the Michigan market. The strategic insights and execution MLC provided have been invaluable for the satellite industry.”
– Beth Williams, Head of State Government Affairs, DISH
“The strong relationships MLC has with Michigan legislators are a game-changer for companies based out of state. Without MLC’s long-standing connections, satellite providers serving Michigan would have faced significant losses.”
– Damon Stewart, Vice President, State Government Affairs, DIRECTV