Efforts by DirecTV and EchoStar to overturn a Kentucky state tax on pay TV services failed, as the Sixth Circuit Court of Appeals upheld the tax as constitutional. The two direct broadcast satellite (DBS) operators had taken issue with a 2005 state law that replaced cable franchise fees with a 5.4% pay TV tax that applies to the cable and DBS industries. Challenging the law in court, DirecTV and EchoStar claimed discrimination as cable companies were relieved of franchise fee burdens while DBS providers (which are exempt from franchise requirements) were subjected to new tax obligations. Upholding a district court decision that favored the state, the Sixth Circuit dismissed the DBS operators’ petition. Declaring that the state “has not . . . altered any competitive balance among in and out-of-state competitors,” Chief Judge Danny Boggs proclaimed that Kentucky “has simply prevented localities from [penalizing] cable companies through franchise fees and substituted a uniform state taxation scheme.” Boggs also observed: “the satellite companies’ opinion of the [tax law] might be very different had they been subjected to the tangled regime of local taxation and franchise fees, as they certainly could have been absent the special exemption granted to them by the Telecom Act.”