Justice John Lahtinen

None of Iowa-based broadcaster Meredith Corp.’s TV stations are in or broadcast into New York. It sought partial refund of New York corporate franchise taxes for 1998, 1999 and 2000. It argued that programming bought under licensing agreements should have been considered rental of tangible personal property, thus reducing the percentage of its worldwide net income allocated to New York. Although some programming was delivered on videotape, the bulk of Meredith’s programming was delivered by satellite. The Third Department annulled denial of Meredith’s refund request. Noting that programming received by satellite either becomes identical to a mailed videotape—if stored on a tape upon receipt—or essentially identical thereto if stored on DVDs or computer servers, the panel found the tax agency’s videotape/satellite distinction irrational and arbitrary. Thus, the determination that the programming was not tangible property effectively resulted from retroactive application of a new interpretation Tax Law §208(11). Absent the agency’s altered interpretation, Meredith would have prevailed since its method of receiving programming was for all relevant tax purposes indistinguishable from a permitted method.