Streaming service suit: Lubbock joins list of Texas cities suing Disney, Netflix and Hulu over unpaid fees
The City of Lubbock indicated last week its intent to become the latest city to join Amarillo, Abilene, Wichita Falls and some of Texas' largest cities in suing Disney, Hulu and Netflix for what they say is 15 years' worth of unpaid fees owed to the cities.
Lubbock's city council approved a contingent legal services agreement with McKool Smith, P.C., Ashcroft Sutton Reyes LLC, and Korein Tillery LLC on Oct. 25 to join a lawsuit accusing the video streaming giants of failing to pay franchise fees which state law requires video providers pay to municipalities for use of the public right-of-way.
The suit, which was filed in a Dallas County district court in August and later moved to federal court, lists more than 25 Texas cities as plaintiffs, including Austin, Houston, Dallas and Fort Worth. The cities claim Disney, Hulu and Netflix have failed to pay franchise fees since 2007 and aims to recover those fees and require them moving forward.
The cities say the streaming companies should be and have been required to pay the fees for using communications lines in public rights-of-way just like traditional cable providers and video-over-IP television carriers (like Vexus).
More: Texas cities say streaming giants Disney, Hulu, Netflix owe them millions in unpaid fees
Franchise fees are usually used by cities to pay down debt and help fund its general budget, including core services like police, fire and road maintenance. The fees owed are based on a percentage of a video company's revenue under state utilities law.
Steven Wolens, a former Texas lawmaker and lead attorney for the cities, told the Texas Tribune in August that cities have not made up lost revenue from consumers flocking to internet streaming services from more-traditional cable providers.
“They should have been paying this fee from the very beginning,” Wolens said. “Shame on them because they are using the public right of way that every other company pays the city to use.”
The exact amount the streaming companies would owe the cities is not known, but could total in the hundreds of thousands to millions of dollars, Wolens said.
Representatives for the streaming services had not immediately responded to the lawsuit.
More: City of Wichita Falls to sue Netflix, Disney and Hulu for franchise fees
Because the City of Lubbock's agreement with the litigating attorneys is contingent on winning the suit, joining it will be at no cost to the city, according to a council agenda document. If the litigation is successful, attorney compensation would be deducted from the settlement, a portion of which the City of Lubbock would receive.
Other Texas cities that initially joined the lawsuit are Allen, Arlington, Beaumont, Carrollton, Denton, Frisco, Garland, Grand Prairie, Irving, Lewisville, McKinney, Mesquite, Nacogdoches, Pearland, Plano, Rowlett, Sugar Land, Tyler and Waco.
This story contains information previously reported by the Texas Tribune's Joshua Fetcher.
Editor's note: This story has been updated to include the City of Wichita Falls. Wichita Falls city councilors voted to join the suit on Oct. 18.
This article originally appeared on Lubbock Avalanche-Journal: Lubbock joins Texas cities suing Disney, Netflix and Hulu
