Texas cities say streaming giants Disney, Hulu and Netflix owe them millions of dollars in unpaid fees

As people cut cable subscriptions in favor of live streaming services, Texas cities, including Dallas, say they’ve lost franchise fee revenue.

THE TEXAS TRIBUNE – A lawsuit filed Thursday by 25 Texas cities claims Disney, Hulu and Netflix have for years fleeced the cities of dollars the streaming giants are required to pay under state law, and now the cities are collecting.

Austin, Houston, Dallas and Fort Worth are among the cities that have sued Dallas County streaming services to recover money they say they have been owed since 2007 and to require the services to pay each year going forward. Under state law, the utilities have to pay cities a franchise fee — which traditional cable providers also pay — in exchange for using communication lines over public rights-of-way to transmit their services to homes.

As more people ditch cable subscriptions in favor of streaming services, cities have lost franchise revenue — money that goes to fund city services like police and fire protection, as well as roads, parks and libraries.

Cities have not offset that revenue with fees for streaming services, said Steven Wolens, a former Texas lawmaker and the cities’ lead attorney. Although state law classifies them as video service providers that must pay the fees, the major streamers haven’t paid a cent to the cities, Wolens said.

“They should have been paying this fee from the beginning,” Wolens said. “It’s a shame because they’re using the public right-of-way that every other business pays the city to use.”

It’s not known exactly how much the streaming giants owe Texas cities, Wolens said. For a smaller city, the losses could run into the hundreds of thousands of dollars, he said. For a larger city, that number could be in the millions.

Other Texas cities that have joined the lawsuit include Abilene, Allen, Amarillo, Arlington, Beaumont, Carrollton, Denton, Frisco, Garland, Grand Prairie, Irving, Lewisville, McKinney, Mesquite, Nacogdoches, Pearland, Plano, Rowlett, Sugar Land, Tyler and Waco.

Cities have been seeking funds dating back to when the services launched: Netflix in 2007, Hulu in 2008 and Disney+, The Walt Disney Co.’s streaming service, in late 2019. Their subscriber bases number in the tens of millions across the world, with Netflix on. top with more than 220 million subscribers.

Representatives for Disney, Hulu and Netflix did not immediately return requests for comment.

This story originally appeared in The Texas Tribune.

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Texas cities say streaming giants Disney, Hulu and Netflix owe them millions of dollars in unpaid fees

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