Austin joins million-dollar lawsuit against Disney, Hulu, Netflix

Austin is among 24 other Texas cities filing a lawsuit accusing Disney DTC LLC, Hulu, LLC and Netflix Inc., of failing to pay millions of dollars in municipal franchise fees as far back as 2007. 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 have not paid annual franchise fees that are required by the Texas Public Utility Regulatory Act (PURA) and are used to fund basic city services. The PURA states that a video service provider must pay a Texas municipality a 5% franchise fee if a video service’s programming are delivered “via wireline facilities located at least in part in the public right of way, such as utility poles over the streets or sidewalks or beneath the roads.” According to a release from the city of Nacogdoches, the franchise fee funds city services including police, fire protection, libraries and road repairs. “Disney, Hulu and Netflix have long withheld statutorily required payments to cities throughout Texas, depriving them of fees that help fund essential city services,” said McKool Smith principal Steven Wolens, who along with co-counsel represents the Texas cities in this lawsuit. “This case was filed on behalf of our municipal clients to ensure future compliance with PURA and recoup significant fees owed by some of the nation’s largest streaming services.”