A small, Cleveland suburb has filed a lawsuit against Netflix and Hulu, trying to force the streaming companies to pay a franchise fee typically applied to cable providers.
The lawsuit is part of a growing national trend of cities in at least 13 states, often pinched by shrinking budgets, targeting the nascent streaming industry for new tax revenues.
The city’s suit is filed under a state law written and passed in 2007 — when Netflix was mostly mailing its customers DVDs and Hulu had yet to launch.
Maple Heights, population 23,000, filed a
class action suit in federal court in August 2020. Its claim is simple: Streaming services like Netflix and Hulu provide content that reaches customers through DSL and fiber optic cable lines along public rights of way, just like cable providers do.
Those cable providers must pay a tax of up to 5% of their gross revenue in an area as a “video service provider” fee. If cable companies must pay, Maple Heights argued, then so should Netflix and Hulu. The lawsuit comes as customers increasingly
bail on cable and opt for streaming — a trend that’s costing cities money.
ohiocapitaljournal.com
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