City of Lexington v. Summit Communications, Inc. , 76 N.C. App. 333 ( 1985 )

WEBB, Judge.

The City of Lexington has adopted an ordinance, a part of which was written into a contract with the defendant. The resolution of this case depends on the interpretation of that part of that ordinance. The ordinance imposes a tax on the cable system’s annual “gross subscriber revenues” which is defined as “any and all compensation received by a grantee from subscribers or users in payment for the community antenna television service.” “Community antenna television service” is defined as “the business of providing an improved television reception service to the public for compensation, by means of a master antenna and cables.” The question posed by this appeal is whether the third tier of service offered by the defendant which is the HBO satellite service is an “improved television reception service.”

The HBO satellite service was not available when the franchise to the defendant was granted. The question is whether the ordinance written into the franchise covers this service. We believe, based on the plain words of the ordinance, that it does not. We do not believe the words “improved television reception service” include a signal that does not originate from a television station and cannot be received on a television set that is not connected to a CATV cable. We hold it was error to enter a judgment against the defendant based on revenues it received for the HBO satellite service.

The plaintiffs argue that in another section of the ordinance a community antenna television system is defined as any facility which in part amplifies television station signals. They say this shows that whatever type signal the defendant receives by HBO satellite the defendant is operating a community antenna system. Whatever type system the defendant is operating, the franchise tax is based on the community antenna television service and the ordinance does not include within this the HBO satellite service. The plaintiffs also argue that G.S. 160A-319, which governs the City’s right to grant the franchise, includes the HBO satellite. If the statute gives the City the right to include the gross receipts from the HBO satellite service in the franchise tax, the City did not do so.

The plaintiffs also argue that if the furnishing of the HBO satellite service is not a part of the CATV system the defendant has exceeded its franchise right and is illegally offering this service. This question has not been presented in this case and we do not pass on it.

For the reasons stated in this opinion, we reverse and remand.

Reversed and remanded.

Judges Phillips and MARTIN concur.