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Multiple cities sue streaming services over franchise fees

This has been coming for awhile, it seems.

A lawsuit filed Thursday by 25 Texas cities claims that Disney, Hulu and Netflix have for years stiffed the cities out of dollars the streaming giants are required to pay under state law — and now cities are coming to collect.

Austin, Houston, Dallas and Fort Worth are among the cities that sued the streaming services in Dallas County to recover money they say they has been owed since 2007 and to require the services to pay each year going forward. Under state law, the services have to pay cities a franchise fee — which traditional cable providers also pay — in exchange for using communication lines over public rights of way to transmit their services into homes.

As more people abandon cable subscriptions in favor of streaming services, cities have lost franchise fee revenue — money that goes to fund city services like police and fire protection as well as roads, parks and libraries.

Cities haven’t made up that revenue with fees from streaming services, said Steven Wolens, a former Texas lawmaker and lead attorney for the cities. Even though state law classifies them as video service providers that must pay the fees, the major streamers haven’t paid cities a dime, Wolens said.

“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.”

Exactly how much the streaming giants owe Texas cities isn’t known, Wolens said. For a smaller city, the losses could number in the hundreds of thousands of dollars, he said. For a larger city, that figure could be in the millions.

Other Texas cities that joined the lawsuit are Abilene, Allen, Amarillo, Arlington, Beaumont, Carrollton, Denton, Frisco, Garland, Grand Prairie, Irving, Lewisville, McKinney, Mesquite, Nacogdoches, Pearland, Plano, Rowlett, Sugar Land, Tyler and Waco.

The cities are seeking funds dating to when the services launched — Netflix in 2007, Hulu in 2008 and Disney+, The Walt Disney Co.’s streaming service, in late 2019.

The city of Beaumont, which as you can see is involved in this litigation, filed its own lawsuit against these three streaming services in February. I could not find any news about that lawsuit since then, so I don’t know if it has been dropped in favor of the current litigation or if there are now two separate actions. My searching did find that several cities were working on this at least as far back as last year. I’d sure like to see a more in depth story about this, but for now this is what we have. Any lawyers want to offer an opinion on their odds of success? The Chron has more.

Beaumont versus Disney, Netflix, and Hulu

Oh, this is going to be fun.

The City of Beaumont is suing Netflix, Hulu, and Disney for failure to pay franchise fees.

At Tuesday’s city council meeting, the city attorney was officially authorized to file the lawsuit.

The city alleges that the companies violated the 2005 Texas Video Service Providers Act, according to a public notice published last week.

“The city’s desired outcome in pursuing the litigation is to recover from the VSPs damages owed to the city for failure to pay franchise fees and obtain an order requiring the VSPs to pay the franchise fees going forward,” the public notice stated.

This is not a nationwide law, City Attorney Sharae Reed said. It is Texas specific, and to her knowledge, Netflix, Hulu and Disney are not paying the franchise fees to any cities in Texas.

“I’m not privileged to say what other cities are doing, but I am aware of some other cities who are in a class action lawsuit,” Reed said. “It’s each city filing their own individual lawsuits, and then we’re coming together.”

All three companies are expected to vigorously oppose the charge, so the city is hoping to employ highly-skilled lawyers on the case. Beaumont intends to work with three law firms on the lawsuit — McKool Smith, P.C., Ashcroft Sutton Reyes LLC, and Korein Tillery LLC.

[…]

Should the lawsuit prove successful for the city, recovered franchise fees will be used to pay for essential municipal services going forward.

I mean, I think the odds of this succeeding are pretty low. I Am Not A Lawyer, but I am a guy who has some insight into how this kind of lawsuit tends to play out in this state. If nothing else, the AG’s office tends to jump in front of a parade like this when it’s viable. But maybe I’m wrong, and maybe a bunch of other cities will look at this and think “we gotta get in on that”. Any real lawyers out there who want to tell me if I’m off base or not, please do so.

The MJ Hegar movie

Coming to Netflix.

MJ Hegar

Mary Jennings “MJ” Hegar stepped away from her last movie deal as it became, as she says, “too blockbuster-y.”

The decorated war veteran now has a deal with Netflix for the movie that has long been in the works, but very well could drop in the middle of her bid to unseat U.S. Sen. John Cornyn next year. It’s a potential boon for a candidate who’s built a career writing, speaking and now making movies about her story — of getting shot down and wounded in Afghanistan, suing the Pentagon and lobbying Congress to scrap restrictions on women in combat.

That story has also fueled her political campaigns. It was told in a three-minute video that went viral as she launched her last campaign, drawing national attention to her race against U.S. Rep. John Carter in a Republican stronghold north of Austin.

Cornyn has deemed her “Hollywood Hegar,” in part because of the praise she has drawn from celebrities like Kristen Bell and Patton Oswalt. But Hegar says she’s trying to accomplish something real with the exposure: She’s long pushed for equality in the Armed Forces and believes it’s important for stories like hers — of women in combat — to be told.

“What I’m trying to accomplish is change — culture change,” Hegar said. “And you do that through books and movies and TV in American culture.”

Hegar — one of nearly a dozen Democrats vying to take on Cornyn in 2020 — earned more than $150,000 over the last year and a half working toward that goal, according to recently filed personal finance disclosures. The disclosures, which Senate candidates are required to file and covers a period from the beginning of 2018 until mid-August, show earnings of $42,500 from the Netflix deal, more than $27,000 in book royalties and $99,000 from a slew of public speaking gigs across the country.

Most of that money was made while she was also running her surprisingly successful campaign against Carter, who she came within three percentage points of beating. Hegar — whose husband works at Dell and helps take care of their two kids in Round Rock — says it’s how she makes enough money to help her family get by as she makes her run at Cornyn.

“The political system the way it is now, you have to be independently wealthy, or have the kind of job like a lawyer, just to be able to run for office,” Hegar said. “So we end up with a lot of people in office who haven’t faced the challenges that our legislators are charged with finding solutions to.”

“I have an accidental opportunity to run for office,” Hegar said. “The dramatic nature of my story means that the place that I can make the biggest impact is, you know, in a public facing role. Even if that’s contrary to my personality type — I’m actually quite introverted.”

I’ve thought about this, and I’ve decided I basically agree with her assessment. She’s been afforded an opportunity, and it’s one I think most of us would take if we were in the same position. She does still have to help support her family while she’s running for office, and frankly this is a much less ethically tangled way of doing it than the various forms of consulting that many others engage in, mostly incumbents. Everyone agrees that our system of financing campaigns is terrible, but the point here is that just being able to run for office is something many regular people can’t afford to do. A larger share of such people than we’re used to seeing ran for office and got themselves elected in 2018, and some of them went through quite a bit of financial struggle to do so. I don’t have any easy answers for this, but it’s very much worth talking about and making visible. If Hegar’s situation can help a little with that, so much the better.

Will this movie ultimately work against her? It’s entirely possible. Cornyn will certainly use it – he already has been – but the other Dems in her primary are likely to take some shots as well. And even though many people would make the same decision she made to take Netflix’s offer, that doesn’t mean all of them will support her decision. It could go either way for her, and I’m sure she’s aware of that. I’m fine with it, and within reasonable bounds I’m fine with anyone criticizing it or not being fine with it. We’ll know soon enough if it made any difference.