Indianapolis, Fishers, 2 other cities sue Netflix, Hulu, others seeking franchise fees

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Indianapolis and three other Indiana cities are suing video streaming services, including Netflix and Hulu, seeking to require them to pay the same franchise fees to local governments that cable companies must pay.

The class-action lawsuit filed this month argues that major video streaming services must pay a 5% franchise fee of gross revenue to the localities where their customers reside because of the use of internet equipment in the public right of way to transmit programming.

The lawsuit demands the companies — Netflix, Disney, Hulu, DirectTV and Dish Network — be required to pay unpaid fees for past services and all future fees required by law, The Times of Northwest Indiana reported. It was filed by the cities of Valparaiso, Fishers, Indianapolis and Evansville.

An estimate of how much money is owed statewide was not provided.

According to the lawsuit, cable companies have abided by the Video Service Franchises Act’s requirements and handed over the fees. The money is typically paid by cable subscribers as an additional charge on their monthly bills.

Records maintained by the Valparaiso clerk-treasurer show the city received $446,000 in video franchise fees last year, compared with $476,000 in 2017 — a decline likely to an increasing number of residents “cutting the cord” by replacing their cable television service with subscriptions to streaming services.

City attorney Patrick Lyp said the lawsuit will level the playing field so all companies delivering video programming in Valparaiso and across the state pay the fees.

Court records show the streaming service companies have not yet filed a response to the lawsuit. The suit before Marion Superior Judge Heather Welch on the Indiana Commercial Court docket is City of Fishers et al. v. Netflix et al., 49D01-2008-PL-026436.

A similar lawsuit seeking to require streaming services pay local franchise fees still is pending in Missouri after being filed last year by the city of Creve Coeur.

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