Texas Cities Sue Netflix, Hulu, Disney+ Over Municipal Franchise Fees

A group of Texas cities is again trying to collect allegedly unpaid “municipal franchise fees” from streaming services Netflix, Disney+ and Hulu dating back as far as 2007.

The cities, which include Rowlett and Abilene, Allen, Amarillo, Arlington, Austin, Beaumont, Carrollton, Dallas, Denton, Frisco, Fort Worth, Garland, Grand Prairie, Houston, Irving, Lewisville, McKinney, Mesquite, Nacogdoches, Pearland, Plano, Sugar Land, Tyler and Waco, claim the annual franchise fees are required by the Texas Public Utility Regulatory Act (PURA) and used to fund basic city services.

“With this lawsuit, we hope to ensure streaming video companies’ compliance with their PURA obligations moving forward and also recoup unpaid franchise fees from the Disney, Hulu, and Netflix streaming services as follow-on relief,” Blake Margolis, mayor of Rowlett, said in a statement. “Franchise fees are an important source of city revenue. We have an obligation to our residents to ensure that these companies comply with state law and pay what is owed to the city of Rowlett.”

Under the PURA, a video service provider must pay a Texas municipality a 5% franchise fee, if a video service’s programming is delivered via wireline facilities located at least in part in the public right of way, such as utility poles over the streets or sidewalks or beneath the roads. Franchise fees help fund city services including public safety and road repairs.

“Disney, Hulu and Netflix have long withheld statutorily required payments to cities throughout Texas, depriving them of fees that help fund essential city services,” said Steven Wolens, a principal with the Dallas-based McKool Smith law firm, which filed the suit on behalf of the cities.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Rowlett is seeking the reimbursement of annual franchise fees, as well as interest, since Disney, Hulu and Netflix began streaming their platforms in Texas in 2007, 2011 and 2019, respectively.

McKool Smith is co-counsel on the lawsuit with Austin-based Ashcroft Sutton Reyes and St. Louis-based Korein Tillery. Additional cities are expected to join the lawsuit.

The lawsuit was filed despite a judge’s rejection of a similar complaint filed against Netflix and other streamers last October. Motions have also been filed against Netflix by cities in California, Illinois, Indiana and New Jersey with no success.

Netflix & Co. were able to successfully argue that they held no specific “certificate of franchise authority” within the plaintiff cities.

Judge Robert W. Schroeder, III sided with the defendants, finding the language of the Texas Utilities Code unequivocal.

“It is not the province of this court, or courts anywhere, to read words out of a statute,” Judge Schroeder said, as reported by LawStreet.com.

Judge Schroeder dismissed the complaint “without prejudice” subject to refiling “should the defendants become holders of state-issued certificates of franchise authority.”

Tyler County, Texas, D.A. Doubles Down on Netflix Indictment Over ‘Cuties’ Movie

With news spreading about a Texas grand jury indicting Netflix for allegedly promoting “lewd visual material” of a child in the French-language movie, Cuties, the district attorney of Tyler County is doubling down on the criminal charge.

A summons was served on Netflix’s corporate headquarters by Texas Rangers on Oct. 1. Conviction on the felony charge requires a mandatory jail sentence, according to Texas state law.

The movie, about an 11-year-old girl from Senegal who joins a dance troupe to escape an overbearing mother, has generated a firestorm of controversy for the SVOD pioneer regarding the film’s initial marketing and content that critics say overtly sexualizes underage girls.

Tyler County DA Lucas Babin Oct. 6 issued a press release stating that his job is to keep communities in the county safe. Babin said that in his office it is not uncommon to confront cases involving underage children, adding that after watching Cuties, he knew there was “probable cause” to pursue the matter under Section 43.262 of the Texas Penal Code.

“The legislators of this state believe promoting certain lewd material of children has destructive consequences,” Babin said. “If such material is promoted on a grand scale, isn’t the need to prosecute more, not less?”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In a prior statement, Netflix, which acquired streaming rights to the award-winning Cuties at the Sundance Film Festival, said the film is a social commentary against the sexualization of young children — a point of view shared by the film’s director Maïmouna Doucoure.

“This charge is without merit and we stand by the film,” said the streamer.

The Tyler County DA Office declined further comment on the case, citing rules about making statements on pending criminal prosecutions and the defendants involved.

“All defendants are presumed innocent until proven guilty,” concluded the DA’s statement.

Netflix shares were up slightly in early Nov. 7 trading.

Netflix Indicted by Texas Grand Jury for ‘Cuties’ Movie

A Texas grand jury has indicted Netflix on a single felony charge: “promotion of lewd visual material depicting a child” regarding the French-language coming-of-age movie Cuties.

The movie, about an 11-year-old girl from Senegal who joins a dance troupe to escape an overbearing mother, has generated a firestorm of controversy for the SVOD pioneer regarding the film’s initial marketing and content that critics say overtly sexualizes underage girls.

The criminal complaint, filed Sept. 23 in the 1A District Court of Tyler County in the state of Texas, was posted on the social media page of Matt Schaefer, a Republican member of the Texas House of Representatives.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The complaint, which calls out co-CEOs Ted Sarandos and Reed Hastings, alleges Netflix and management “knowingly promote visual material, which depicts the lewd exhibition of the genitals or pubic area of a clothed or partially clothed child who was younger than 18 years of age at the time the visual material was created, which appeals to the prurient interest in sex, and has no serious literary, artistic, political or scientific value.”

The complaint alleges the movie’s values act against “the peace and dignity of the state” of Texas.

In a statement, Netflix said Cuties is a social commentary against the sexualization of young children — a point of view shared by the film’s director Maïmouna Doucoure.

“This charge is without merit and we stand by the film,” said the streamer.

Apple, Netflix, WarnerMedia Pull Out of SXSW Media Festival

Apple (Apple TV+), Netflix and WarnerMedia Entertainment are the latest high-profile media companies to cite the threat of the coronavirus (COVID-19) for nixing plans to attend the annual South by Southwest (SXSW) Music Festival, slated for March 13-22 in Austin, Texas.

Founded in 1987, South by Southwest is an annual conglomeration of film, interactive media, music festivals and conferences increasingly attended by major media companies, including studios, to announce products, content, including home entertainment. Organizers say upwards of 200,000 people attended the event in 2019.

Follow us on Instagram

Netflix was set to unveil five films at SXSW, including LA Originals, a documentary exploring the culture and landmarks of the Chicano and street art movement. The SVOD pioneer also had March 15 panel scheduled for “#BlackExcellence,” a family comedy series starring Rashida Jones and based in part on series creator’s Kenya Barris’ life.

Netflix’s decision comes about a month ahead of its branded stand-up comedy “Netflix Is a Joke Festival” in Los Angeles.

Apple was slated to screen upcoming Apple TV+ content, Beastie Boys Story, from director Spike Jonze; Sundance acquisition Boys Slate and series, “Central Park” and “Home.”

The companies join a growing list of media organizations opting not to send staff and talent to public events as a precaution. France’s annual MipTV 2020 confab in Cannes has been cancelled due to a government current order prohibiting large-scale public events.

California Governor Gavin Newsom March 4 declared a state of emergency following the death of an elderly woman near Sacramento. There are now 160 reported coronavirus cases in the U.S., with 11 deaths.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Austin Public Health, which is testing one possible coronavirus patient, contends the risk to exposure at SXSW and within Austin remains low. Texas has 12 confirmed cases of the virus thus far.

“Today the threat of community spread in Austin remains low, however, we are prepared for it to happen here,” Dr. Mark Escott, interim medical director and health authority for Austin Public Health, said in a press conference.

“Right now, there is no evidence that closing South by Southwest or other activities is going to make this community safer. We are constantly monitoring that situation.”

Escott said Austin Public Health would continue to evaluate situation, adding that any evidence that the community would be safer by closing down public events, “we’ll do that.”

CNN just launched a pop-up podcast, “Coronavirus: Fact vs Fiction,” with CNN Chief Medical Correspondent Dr. Sanjay Gupta, covering the latest news of the COVID-19 virus and what people can do safeguard themselves.

Meanwhile, with increased numbers of events being cancelled due to virus concerns, the airline industry reported it expects to lose $63 billion to $113 billion in revenue from global passenger traffic in 2020.

The news nixed brief Wall Street gains with the Dow Jones Industrial Average losing 500 points and the S&P down more than 1%.

Nielsen: 56% of U.S. TV Consumers Stream Video

It’s official: The majority of American TV consumers also stream video.

New data from Nielsen found that 56% of domestic consumers stream video compared to 48% in 2018 and 40% in 2017.

The average consumer watches more than two hours of streamed content daily, which is up from slightly less than two hours last year.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

At the same time, linear TV consumption remains most popular among 82% of streamers — with almost 90% still watching pay-TV networks.

Nielsen found that 65% of U.S. households can now stream video compared to 59% in 2018 and 51% in 2017.

Among U.S. cities, Austin, Texas has the highest percentage (70%) of streaming users, while Pittsburgh, Pa., has the lowest at 45%. Cleveland residents spent the most time streaming video at two hours and 29 minutes per day.