25 Texas Cities Are Suing Video-Streaming Giants Netflix, Hulu, Disney Plus | Here's Why

Twenty-five cities in the state of Texas have sued major streaming services Netflix, Hulu, and Disney Plus. According to the lawsuit, the entertainment providers are due to pay the state-required fees they have long been ignoring.

The complaint came weeks after Netflix, one of the major streaming services worldwide, reported a decline in subscriptions in the United States and Canada.

Texas Cities Launched Lawsuit Against Netflix, Disney Plus, Hulu

According to The Texas Tribune, the lawsuit was filed Thursday at the Dallas County District Court. Austin, Dallas, Fort Worth, and Houston were among the biggest cities asking the streaming giants about the franchise fees they say the cities should collect under state law.

According to the filing, the cities said the streaming services owed them franchise fees since 2007. More so, they wanted them to guarantee that they would pay each year going forward.

Based on the Texas Public Utility Regulatory Act, which the complaint was based on, municipalities can collect a franchise fee of 5% of the gross receipts from a video service provider. The fee is in exchange for using communication lines over public rights of way to transmit their services into homes.

Steve Wolens, the lead attorney for the Texas cities, said even if the streaming providers say they are not "video service providers," they are still using the public right of way that every other company pays the city to use.

"Under Texas law, these companies are technically video service providers, and even if they say they aren't, they're using public property without paying for it, so they're trespassing," Wolens noted.

But despite the lawsuit, it is still not known how much each streaming service owes per city. According to Wolens, it could only be thousands of dollars for small cities, but the cost could balloon to millions for Houston, Austin, and larger areas.

What Prompted Texas Cities to Sue Netflix, Hulu, Disney Plus?

The Dallas Morning News reported that the lawsuit came because of consumer behavior. Many people have resorted to switching to streaming providers like Netflix, Hulu, and Disney Plus for more accessible viewing.

In effect, cable providers, who are paying these Texas cities for fees, have been cutting down.

Statista reported that by 2024, the number of households not paying for traditional TV services in the country was projected to hit over 46 million.

The lawsuit is seeking funds from the providers from different times. Netflix has owed them since 2007, Hulu since 2008, and Disney Plus only in 2019.

Netflix alone, in the United States, has over 73 million subscribers. However, they have recently reported having a decline in subscriptions this year after announcing that they would introduce advertisements on the platform.

Abilene, Allen, Amarillo, Arlington, Beaumont, Carrollton, Denton, Frisco, Garland, Grand Prairie, Irving, Lewisville, McKinney, Mesquite, Nacogdoches, Pearland, Plano, Rowlett, Sugar Land, Tyler, and Waco, are among the smaller Texas cities suing Netflix, Hulu, and Disney Plus.

This article is owned by Latin Post.

Written by: Ivan Korrs

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