On August 4, over two dozen Texas cities filed a lawsuit against Disney, Hulu and Netflix, alleging that the companies failed to pay millions of dollars in municipal franchise fees.

As previously covered by Local Profile, Plano officials announced their intention of joining cities across the country suing the streaming services as early as June 14, 2021.

The lawsuit, filed in Dallas County, claims that the streaming services have failed to comply with the Texas Public Utility Regulatory Act (PURA) which mandates the following: “The holder of a state-issued certificate of franchise authority shall pay each municipality in which it provides cable service or video service a franchise fee of five percent.” 

According to Beaumont City, this fee applies “if a video service’s programming is 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.” The fee’s purpose is to fund city services including fire departments, libraries and road repairs.

The lawsuit alleges that Disney, Hulu, and Netflix failed to pay their fees since they began streaming their platforms in Texas in 2019, 2011 and 2007 respectively.

“With this lawsuit, we hope to ensure streaming video companies’ compliance with their PURA obligations moving forward and also recoup unpaid franchise fees from the Disney, Hulu, and Netflix streaming services as follow-on relief,” said Sharae Reed, city attorney of Beaumont in an official statement. “Franchise fees are an important source of city revenue. If streaming companies refuse to pay these fees, the city has to cut services or seek alternate sources of revenue. We have an obligation to our residents to ensure that these companies comply with state law and pay what is owed to the city.”

As of writing, the cities participating in the lawsuit are 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. Additional cities are expected to join the lawsuit.