Present:   All the Justices

ARLINGTON COUNTY

v.   Record No. 992662   OPINION BY JUSTICE ELIZABETH B. LACY
                                     November 3, 2000
MUTUAL BROADCASTING SYSTEM, INC.

           FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
                     Joanne F. Alper, Judge

      Arlington County appeals the decision of the trial court

that Mutual Broadcasting System, Inc. (Mutual) is entitled to

an exemption from the business license tax pursuant to Code

§ 58.1-3703(C)(3) because it operates a radio "broadcasting

station or service." 1    Because the record supports the trial

court's findings that Mutual widely disseminated and

transmitted its radio signal for reception by the general

public, we will affirm the judgment of the trial court.

                                  I.
      Mutual produces a variety of radio programs at its

studios in Arlington County, Virginia.     The broadcast signal

for these programs is processed in a "master control room

area" at Mutual's studios through complex equipment which

routes, monitors, and adjusts the signal for further

transmission.   The refined signal is sent from the master

control room to a satellite "earth station" uplink facility by

one of two methods.      It may be broadcast from a "KU" satellite


      1
       During the years in question, the same language was in
former Code § 58.1-3703(B)(3).
antenna located on the roof of the Arlington facility or

through a "T1" telephone line.   Programming transmitted

through the "T1" telephone line is converted to digital pulses

for transmission over the line and then converted back to a

radio signal when it reaches the earth station.    Approximately

seventy-five percent of Mutual's programming is transmitted

over the "T1" line.

     The earth station, located in Mount Vernon, New Jersey,

relays the radio signal to a communications satellite located

in space, which, in turn, relays the signal back to earth.

The signal is received by several thousand radio stations

affiliated with Mutual through contractual arrangements.      The

affiliate radio stations then rebroadcast the radio signal to

the public.   The radio signal is also received and rebroadcast

by non-affiliate stations such as college radio stations and

the United States Armed Forces Radio Network.     Furthermore,

the radio signal can be received by members of the public

directly, if they have appropriate equipment. 2   The radio

signal is not encoded or encrypted and there is no fee for

receiving this signal.   Mutual's broadcasts are paid for by

advertising revenues.


     2
       Members of the public with appropriate equipment may
also receive the radio signal directly from the "KU" satellite
transmission of the signal from Mutual's Arlington facilities
to the earth station.

                                 2
        Though Mutual owns the Arlington facilities, its parent

company, Westwood One, Inc. (Westwood), owns the "KU"

satellite and possesses the Federal Communications Commission

(FCC) license for these radio transmissions.    The earth

station is owned by General Electric.    Mutual does not own the

satellite, but has a "capital lease" for it which covers over

ninety percent of the estimated use of the life of the

satellite.    Thus, for financial accounting purposes, Mutual

"owns" the satellite.

        The County assessed business license taxes against Mutual

based on its gross receipts.    Mutual filed two applications

challenging these assessments; the first application covered

the years 1990–1993, and the second addressed years 1994 and

1995.    In both applications Mutual asserted that the

assessments were erroneous because it was exempt from the tax

pursuant to Code § 58.1-3703(C)(3) and that the County's

assessments were not fairly apportioned and, thus,

unconstitutional.    The applications were consolidated.    The

trial court granted the County's motion for partial summary

judgment and dismissed Mutual's constitutional claims.

Following an ore tenus hearing, the trial court determined

that Mutual was entitled to the exemption from taxation and

ordered the County to refund to Mutual $652,833.47 in taxes,

penalties, and interest.    The County filed this appeal.


                                  3
     The County assigns five errors to the trial court's

judgment which effectively raise two issues.   First, the

County asserts that the trial court did not strictly construe

the broadcast exemption statute to give the statute the

construction which would deny the exemption and resolve any

doubt in favor of taxation.   Second, the County asserts that

the trial court erred in finding that Mutual disseminates its

programming to the public and transmits radio signals for

general reception, thereby qualifying Mutual for an exemption

under Code § 58.1-3703(C)(3).   We consider these issues in

order.

                                    II.

     The trial court, relying on Chesterfield Cablevision,

Inc. v. County of Chesterfield, 241 Va. 252, 401 S.E.2d 678

(1991), concluded that Code § 58.1-3703(C)(3) provided an

exemption from taxation and, as such, must be strictly

construed.   That is to say, if the statute is subject to more

than one interpretation, the construction denying the

exemption must be adopted and any doubt must be resolved in

favor of taxation.   WTAR Radio-TV Corp. v. Commonwealth, 217

Va. 877, 879, 234 S.E.2d 245, 247 (1977); Winchester TV Cable

Co. v. State Tax Comm'r, 216 Va. 286, 290, 217 S.E.2d 885, 889

(1975).   Nevertheless, the County asserts that the trial court

did not apply strict construction to this statute.


                                4
     Code § 58.1-3703(C)(3) provides:

     C. No county, city, or town shall impose a license
     fee or levy any license tax . . . for the privilege
     or right of operating or conducting any radio or
     television broadcasting station or service[.]

In Chesterfield Cablevision, a cable television company sought

an exemption from taxation under this statute.   In resolving

the issue, we applied the definition of "broadcasting"

previously adopted in Winchester TV.    Winchester TV involved

Code § 58-441.6(j), an exemption from sales and use taxes.    We

concluded that "broadcasting" as used in that statute means

     "to make widely known: to disseminate or
     distribute widely or at random . . . to send out
     from a transmitting station (a radio or
     television program) for an unlimited number of
     receivers, . . ."

     . . . .

          . . . transmitted into space for anyone, who
     has the equipment and is within range of the signal,
     to receive.

Winchester TV, 216 Va. at 290-91, 217 S.E.2d at 889.     In

applying this definition, we have concluded that programming

which was delivered only to paid subscribers was not

"broadcasting" because such programming was not disseminated

or transmitted to the general public, Chesterfield

Cablevision, 241 Va. at 254, 401 S.E.2d at 679-80; Winchester

TV, 216 Va. at 291, 217 S.E.2d at 889, and that equipment used

in the production of programs was not "broadcasting equipment"



                               5
unless it was used directly in "the act of disseminating a

signal into the air," WTAR Radio-TV, 217 Va. at 882, 234

S.E.2d at 248.

     The trial court, again relying on Chesterfield

Cablevision, applied the construction of "broadcasting" set

out above and held that Mutual was performing a broadcasting

service because its activities were directly involved in

transmitting and disseminating its radio signal to the general

public.

     The County does not suggest that a different definition

of "broadcasting" was required to satisfy a strict

construction of the statute.    In fact, in its briefs before

this Court and the trial court, the County applies the trial

court's construction of the term.      The County's real

disagreement is not with the trial court's interpretation of

the statute, but with the trial court's determination that the

evidence presented showed that Mutual's activities met the

definition of "broadcasting."    Thus, we will turn to the

County's remaining issue, that is, whether Mutual engages in

activities which constitute the direct transmission and

dissemination of its radio signal to the general public.

                                III.

     The trial court found that Mutual's signal "is

transmitted from the satellite into space and is picked up by


                                 6
both Mutual's affiliates, other entities . . . who are not

affiliates, i.e., the Armed Forces Radio Network, and

individuals with the proper equipment" and "received by

millions of listeners who are members of the general public."

The County asserts that this finding is erroneous because

although Mutual produces programs which are "eventually widely

disseminated to the public," the transmission or dissemination

of the programs is performed by independently owned and

operated radio stations and, thus, Mutual does not itself

transmit the radio signal in all directions to the public.

Mutual, the County asserts, possesses no FCC license to

broadcast.   The broadcasters, according to the County, are the

affiliate stations; Mutual is only a producer or distributor

of the programs.

     The County argues that the portion of Mutual's

programming that is sent to the earth station via the "T1"

line from the Arlington facilities is not the transmission of

a radio signal and is not available to the public.    With

regard to the remaining programming transmitted to the earth

station via the "KU-band" satellite, the County argues that

Westwood, Mutual's parent company, transmits this signal and

holds the license from the FCC to do so.   Continuing, the

County argues that because Mutual owns neither the earth

station nor the satellite and does not possess an FCC license


                                7
to transmit signals from the satellite, Mutual does not

transmit its radio signal at all.

     The County's position challenges findings of fact made by

the trial court. 3   The standard of review we apply to such

challenges requires that we accept the trial court's findings

of fact as true, unless they are without support in the

record.   Quantum Dev. Co. v. Luckett, 242 Va. 159, 161, 409

S.E.2d 121, 122 (1991).

     First, we reject the County's argument that Mutual's

activities are not "broadcasting" because Mutual does not

possess an FCC broadcasting license.    The definition of

"broadcasting" which we have adopted does not include a

requirement that a broadcaster have an FCC broadcasting

license, and the failure to have such a license, while a

factor to consider, is not dispositive in determining whether

Mutual is disseminating its radio signal to the public.     See

WTAR Radio-TV, 217 Va. at 880, 234 S.E.2d at 247 (FCC

regulations do not control meaning of broadcasting).


     3
       The County variously states that the facts are
"essentially undisputed" and that the "legal conclusions to be
drawn from the undisputed facts are at issue . . . ." The
County also asserts that it assigned error to the trial
court's factual finding "that the broadcast signal received by
the public is Mutual's and not that of others, i.e., General
Electric and the independent radio stations." We consider
these assignments of error as challenges to the factual
findings of the trial court and review them accordingly.



                                 8
     The County's basic contention is that because Mutual does

not own the equipment utilized in the process of transmitting

its radio signal to the public, it does not broadcast its

radio signal and, therefore, does not qualify as operating or

conducting a broadcasting service pursuant to Code § 58.1-

3703(C)(3).   We reject this contention.

     In determining whether an entity is operating or

conducting a broadcasting service, we examine the entity's

activities up to the point at which the entity releases

control of the transmission or dissemination of its

programming or signal.    Ownership of the equipment used in the

process of transmission is not determinative of the scope of

an entity's activities.   As noted above, Mutual has a "capital

lease" for the satellite covering approximately ninety percent

of the estimated use of the life of the satellite.    The use of

the satellite, therefore, is controlled by Mutual through this

contract.   The fact that Mutual chooses to lease rather than

own the equipment used in the dissemination or transmission of

its radio signal does not alone defeat a finding that Mutual

engages in a "broadcasting service."

     The record does not show the contractual relationship

between the owner of the earth station and Mutual; however, it

is fair to infer that Mutual retains control during

transmission of the signal to the satellite because of


                                 9
Mutual's continuing control of the use of the satellite

through its lease.   Similarly, the record does not show the

relationship, contractual or otherwise, between Mutual and

Westwood, the owner of the satellite transmitting Mutual's

radio signal to the earth station.   Nevertheless, for the same

reason, it is fair to infer that Mutual retains control over

its signal while the signal is transmitted by Westwood to the

earth station because Mutual has control over the satellite

transmission of the signal.

     The record supports the conclusion that Mutual retains

control of the transmission or dissemination of its radio

signal through the point at which the signal is transmitted by

the satellite.   The record also shows that at that point

Mutual's radio signal can be captured by not only affiliate

radio stations, but also by non-affiliate radio stations such

as colleges and other institutions of learning as well as the

Armed Forces Radio Network.   Additionally, any member of the

listening public who has a specific type of receiver can

receive Mutual's broadcast signal as it is transmitted from

the satellite.   Neither these listeners nor the non-affiliate

radio stations pay any fee to Mutual for this programming.

This arrangement is not analogous to cases in which

transmission was made only to paying subscribers.     See WTAR

Radio-TV, 217 Va. at 881, 234 S.E.2d at 247; Winchester TV,


                               10
216 Va. at 291, 217 S.E.2d at 889.    The record supports the

trial court's finding that Mutual created, transmitted, and

disseminated radio signals to the public and, therefore, was

engaged in broadcasting.

     Finally, the trial court also noted in its opinion letter

that according to a deputy commissioner of revenue, the

"import" of the broadcast exemption statute "goes to functions

that enhance, sustain, process, refine or directly produce the

transmission or dissemination."     This definition as well as

the statute itself recognizes that an entity need not be a

radio or television "station" to qualify for the exemption.

As we stated in WTAR Radio-TV, equipment which is used

directly in disseminating or transmitting the signal into the

air is considered "broadcasting equipment" for purposes of the

sales and use tax statute.   217 Va. at 882, 234 S.E.2d at 248.

Similarly, activities which are directly related to the

dissemination and transmission of the radio signal are

broadcasting services for purposes of Code § 58.1-3703(C)(3).

The trial court determined that Mutual's activities were a

"radio broadcasting service" under this definition and we

conclude that the record supports that finding.

     For the reasons stated, we will affirm the trial court's

judgment that Mutual carried its burden of proof that it is a




                               11
"radio broadcasting service" and qualifies for the exemption

from a business license tax under Code § 53.1-3703(C)(3). 4

                                                       Affirmed.




     4
       In light of our holding, we do not address Mutual's
assignments of cross-error regarding whether the apportionment
of the taxes was unconstitutional and whether the trial court
properly characterized Code § 58.1-3703(C)(3) as a tax
exemption statute.

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