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24 Cities file suit against The Walt Disney Company, alleging the company failed to pay millions

Twenty-four cities have filed suit against The Walt Disney Company, accusing the media giant of failing to pay municipal franchise fees as far back as 2007, according to Blue Ribbon News.

The lawsuit, filed in Dallas County, Texas, specifically accuses Disney’s Direct-to-Consumer Division and Hulu of neglecting to pay millions of dollars on franchise fees to the following municipalities: Rowlett, Abilene, Allen, Amarillo, Arlington, Austin, Beaumont, Carrollton, Dallas, Denton, Frisco, Fort Worth, Garland, Grand Prairie, Houston, Irving, Lewisville, McKinney, Mesquite, Nacogdoches, Pearland, Plano, Rowlett, Sugar Land, Tyler, and Waco.

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Also named in the suit is Disney+ streaming rival Netflix, Inc.

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The lawsuit alleges that the streaming giants have failed to pay the annual franchise fees required by the Texas Public Utility Regulatory Act or PURA. Fees paid to PURA by the streaming entities are then used to fund basic city services.

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“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,” Mayor Blake Margolis of the City of Rowlett, Texas. “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.”

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The Texas Public Utility Regulatory Act requires providers to pay Texas municipalities a 5% franchise fee when video service is delivered via facilities located in the public right of way, such as utility poles located over sidewalks and streets. Fees are used to fund road repair projects by the municipalities and services such as public safety.

“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 McKool Smith principal Steven Wolens, a representative for the Texas municipalities in the lawsuit. “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.”

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The lawsuit filed in Dallas County court alleges that Disney, Hulu, and Netflix failed to pay the required franchise fees to some municipalities as far back as 2007. Rowlett, Texas, for example, is hoping to receive reimbursement of those annual fees plus interest.

Additional municipalities are expected to join the lawsuit as well.

About Becky Burkett

I'm an enthusiastic writer who finds joy in random things like cold weather, snow, "I Love Lucy," "The Andy Griffith Show," journals full of blank paper, countdowns to Christmas, the month of December, "Toy Story," "Sleeping Beauty," my 4 kids, my 4 shih tsus, Disney Parks history, Imagineering and visiting the parks. I think Walt Disney is the standard against which genius should be measured. I love to write about Disney Parks, Disney history, all things Imagineering and PIXAR. I adore the colors, story and art direction of Disney's "Sleeping Beauty" (Team Make it Blue!), and "Toy Story" is life (minus "Toy Story 4"). I believe Walt Disney was so much more than an entertainment and theme park tycoon; I believe he was a savant with a vision for life and how it could be if happiness and kindness are strived for. I love Biergarten at EPCOT and 1900 Park Fare at Disney's Grand Floridian. You can find me croonin' with the birdies at the Enchanted Tiki Room, chillin' on the PeopleMover or hangin' with Woody and the gang at Toy Story Land. I'm always looking for Imagineers in the parks, and I'd rather meet Joe Rohde and Tony Baxter than anyone in Hollywood! Hey, if you dream it, you really can do it!