The City of Austin is among the cadre of cities in Texas that have pursued legal action against streaming giants Disney, Hulu and Netflix, according to reports from Austin-based media outlets.
Citing sister station East Texas NBC affiliate KETK, Austin’s KXAN reported that 25 Lone Star cities are complainants in a lawsuit filed in Dallas County on Thursday. The suit claims that Disney, Hulu and Netflix have accrued back annual franchise fees the cities need – as stated in the Texas Public Utility Regulatory Act (PURA) – to fund basic city services, per the report.
According to KETK and KXAN, the state capital, which is home to nearly a million people, is owed approximately $9 million in unpaid fees from 2007 to last year.
A city spokesperson said that the funds would’ve gone toward Austin’s General Revenue Fund, calling the losses conservative.
“Under state law, private use of the city’s right of way requires compensation for the use,” a statement from the city reads. “Since 2007, the video streaming companies such as Netflix, Hulu and Disney have provided their video services to subscribing customers via broadband internet through wireline facilities located at least partially in the public right of way . . . Like the other cities involved in the legal challenge to the streaming services right of way compensation, the city has hired outside counsel on a contingency fee basis to represent the city.”
Austin CBS affiliate KEYE, citing a report from Texas Tribune, reported that the change in people’s viewing habits have had an adverse effect on cities’ franchise fee revenue.
Dallas-Fort Worth (DFW) attorney Steven Wolens of the law firm McKool Smith serves as the cities’ legal counsel in the litigation.
A former state legislator, Wolens told the online publication that the defendants have yet to pay his clients a cent.
“They should have been paying this fee from the very beginning,” he said, per Texas Tribune. “Shame on them because they are using the public right of way that every other company pays the city to use.”
According to Wolens, the report said, it’s unknown how much the streaming companies owe exactly to the cities.
Smaller cities could be dealt with losses equaling hundreds of thousands of dollars while their larger counterparts may suffer damages in the millions, per the attorney.
The companies haven’t responded to the suit, Texas Tribune reported.
