Irving is suing three major streaming services- Disney+, Hulu, and Netflix- in hopes of recovering franchise fees the city believes the companies owe for their use of wires located in the public right of way.
Irving is the latest Texas city to file a lawsuit against the three streaming giants, joining Dallas, Austin, Plano, and Frisco, who have all taken similar legal action against the trio of streaming services.
They’re asking that the streaming companies also be responsible for paying a franchise fee of 5 percent of each service’s gross revenue, similar to cable companies, which offer their infrastructure for streaming services to use.
When Plano filed their lawsuit in June, city spokesperson Steve Stoler addressed a request to interview the city manager with a prepared statement from the city attorney’s office.
“The City Attorney’s office is asking the City Council to authorize Plano to join the City of Dallas and other cities in Texas in a lawsuit against streaming video services such as Netflix and Hulu to require them to pay a franchise tax of 5 percent of their gross revenue for use of the public rights of way which is the same fee imposed on cable video providers,” the statement reads. “State law requires city contingency legal fee contracts to be authorized by the City Council and Texas Attorney General.”
In the past, cable companies were contractually obligated to pay a fee to city municipalities. So far, though, streaming services have been unwilling to abide by the same structure.
U.S cities had already been fighting to make franchise fees a requirement for streaming services, but efforts have been amplified in response to the economic downturn caused by COVID-19.
As more customers shift away from traditional cable packages and towards streaming services, the amount of franchise fees being paid out has dipped severely over the years, causing many municipalities to sour. Now, many of these city municipalities are seeking recovery payments to make up for the lost time.
Irving will seek to be reimbursed for fees dating back to 2007 and an order forcing the companies to pay fees in the future, according to city documents. Plano, Dallas, and Austin are expected to take a similar approach.
Yesterday, the Irving city council voted to approve a contract with the same firm that will represent Plano, Dallas, and Frisco in their cases against the three colossal streaming services.
Trying to pry the funds from the streaming companies won't be an easy task. Not only are the franchise fees not technically owed to the cities, but each streaming service boasts quite the legal team to dispute it.
In Plano, documents obtained by The Record indicate that city attorneys believe the lawsuit would an uphill climb and that the city is not "adequately" prepared to handle the litigation.
Perhaps the combined efforts of the Texas cities involved- Dallas, Austin, Frisco, and Plano- will help build a more concrete case against Hulu, Netflix, and Disney+, but at this time, it seems that a major settlement is an unlikely result.