Pacific Broadcasting Corporation v. Robert A. Riddell, Commissioner of Revenue and Taxation, Territory of Guam

Appellant operates a radio station on the Island of Guam. It seeks a refund of taxes paid to Guam pursuant to a privilege tax upon service businesses within the territory, measured by a fixed percentage (2 percent) of gross receipts. (Gov’t Code of Guam §§ 19540,19541.03.) Because some of its receipts are earned in interstate commerce, appellant argues that the Commerce Clause of the Federal Constitution exempts it from the Guam tax. The district court granted summary judgment to appellee; we affirm.

Some of appellant’s broadcasts reach islands outside the Guam territory, with beneficial effects on its advertising rates and revenues. The station receives revenues from both local and national advertisers, the former being interested only in local audiences and the latter in both local and out-of-territory audiences. Appellant’s predecessor, the prior owner of the radio station, had made an agreement with Guam tax authorities to exempt from taxation a certain portion of advertising revenues received from national advertisers. The agreement was designed to eliminate from taxation all revenues attributable to the station’s out-of-territory audiences. (See Gov’t Code of Guam §…