Two East Texas Cities Among 25 in Texas Suing Disney+, Hulu, Netflix

Netflix, Hulu and Disney+, chances are pretty good that you're subscribed to at least one, or possibly all, of those streaming services. I am. One thing you may not know, which I didn't until I ran across this report, is that those streaming services have fees that they must pay to Texas cities. 25 cities in Texas, including two from East Texas have filed suit against the above streaming services because they haven't paid their fees to those cities.

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Disney DTC LLC (Disney+), Hulu, LLC (Hulu) and Netflix Inc. (Netflix) are currently under suit from 25 Texas cities because those streaming services have not paid their municipal franchise fees to those cities. Those fees are used to help those cities fund police and fire departments, make road repairs and help other public services like libraries. An amount owed to each of these cities was not released but the unpaid fees go back to at least 2007.

Two East Texas cities have joined this lawsuit, Tyler and Nacogdoches. The other 23 cities are:

• Abilene
• Allen
• Amarillo
• Arlington
• Austin
• Beaumont
• Carrollton
• Dallas
• Denton
• Frisco
• Fort Worth
• Garland
• Grand Prairie
• Houston
• Irving
• Lewisville
• McKinney
• Mesquite
• Pearland
• Plano
• Rowlett
• Sugar Land
• Waco

Steven Wolens of McKool Smith, the law firm representing the cities against the streaming services, said:

Disney, Hulu and Netflix have long withheld statutorily required payments to cities throughout Texas, depriving them of fees that help fund essential city services. 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.

Its possible that other Texas cities could join this lawsuit. These fees are a requirement set forth by the Texas Public Utility Regulatory Act. In short, the act is meant to ensure quality service and fair business practices by various utilities. I will link the full Texas Public Utility Regulatory Act in the red box below but the following is essentially what the act does.

Section 11.002. Purpose and Findings

• This title is enacted to protect the public interest inherent in the rates and services of public utilities. The purpose of this title is to establish a comprehensive and adequate regulatory system for public utilities to assure rates, operations, and services that are just and reasonable to the consumers and to the utilities.
• Public utilities traditionally are by definition monopolies in the areas they serve. As a result, the normal forces of competition that regulate prices in a free enterprise society do not operate. Public agencies regulate utility rates, operations, and services as a substitute for competition.
• Significant changes have occurred in the telecommunications and electric power industries since the Public Utility Regulatory Act was originally adopted. Changes in technology and market structure have increased the need for minimum standards of service quality, customer service, and fair business practices to ensure high-quality service to customers and a healthy marketplace where competition is permitted by law. It is the purpose of this title to grant the Public Utility Commission of Texas authority to make and enforce rules necessary to protect customers of telecommunications and electric services consistent with the public interest.