Cable Firms Pass on Tax in Various Ways

Some cable television viewers in Orange County are already feeling the bite from the controversial new property tax assessments imposed on cable companies, with operators increasing their monthly rates by as much as $2.65.

But though 10 local cable companies have presented a united front in fighting the new taxes through newspapers advertisements and legal proceedings, they have taken divergent approaches in passing the new costs on to their customers.

Continental Cablevision in Tustin, for example, has increased basic cable rates by $2 a month, and the customer’s bill specifically states that it can be attributed to property taxes. Dimension Cable, which is owned by Times Mirror Co., owner of the Los Angeles Times, has added $1.27 to its basic rate, and also itemizes the charge.

Paragon Cable, which was hit with one of the largest tax increases, has added $2.65 for the property tax as part of an overall $3 rate increase. But Paragon has chosen not to show a separate tax charge on the bill.

General Manager Navarra R. Williams said the actual tax bite for Paragon amounted to $1.78 per customer, but that the rate increase was higher because it didn’t kick in until six months after the company started paying the higher tax. He added that the $3 rate hike did not cover all the company’s cost increases.

Comcast Cablevision has raised its rates by $1.95 but has also chosen not to show it as a separate charge.

And some systems, including Cablevision of Orange and Copley/Colony in Costa Mesa, have not yet increased their rates.

The new assessments, which have increased the collective annual tax bill of 10 local cable firms from $2.4 million to $7.7 million, have been appealed, and the cable companies express optimism that they will ultimately prevail and receive some of the tax money back.

If that happens, the companies have pledged to pass the refund on to consumers as well. “We would immediately stop the surcharge, and then take the total refund, deduct the cost of attorneys’ fees, and distribute the rest to our customers,” said Richard J. Waterman, director of corporate affairs for Times Mirror Cable Television.

But since any refund is probably years away, some current cable customers could lose out. Anyone who moves or discontinues cable service would not see the money they paid out for the taxes, because the companies say it would be too complex to track exactly who paid the surcharges and then find them at the time that the refunds came through.

And some companies may choose not to refund the money, but rather use it to offset future rate increases.

“If we’re victorious, we’ll have to look at all the dollars that went out, the litigation costs, the communications costs (for the newspaper ad campaign and notices to customers), and then decide whether to do a one-time rebate, or maybe a price freeze,” Williams said. “It’s going to be a little complicated, but we hope we have that problem.”