Million-Dollar Lawsuit: Time Bad For Disney, Hulu, Netflix

Disney DTC LLC, Hulu, LLC, and Netflix Inc will be shelling out millions of dollars in municipal franchise fees that date back as far as 2007. Austin is among 24 other Texas cities filing a lawsuit accusing the streaming giants.

The lawsuit was filed in Dallas County on behalf of Abilene, Allen, Amarillo, Arlington, Austin, Beaumont, Carrollton, Dallas, Denton, Frisco, Fort Worth, Garland, Grand Prairie, Houston, Irving, Lewisville, McKinney, Mesquite, Nacogdoches, Pearland, Plano, Rowlett, Sugar Land, Tyler, and Waco.

The lawsuit alleges that the streaming services haven’t paid their annual franchise fees that are required by the Texas Public Utility Regulatory Act (PURA). The money is used to fund basic city services. The services are expected to pay a 5% franchise fee if a video service’s programming is delivered “via wireline facilities such as utility poles over the streets or sidewalks or beneath the roads.”

The franchise fee funds city services like police, fire protection, libraries, and road repairs. The lawsuit says the amenities have been withheld as Disney, Hulu and Netflix haven’t made the statutory payments.

The lawsuit is seeking reimbursement of annual franchise fees, as well as interest, as Disney, Hulu and Netflix began their services in Texas in 2007, 2011, and 2019, respectively. The reports also say that additional cities are expected to join the lawsuit soon.