Knoxville joins class action lawsuit to compel Netflix, Hulu to pay franchise fees

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KNOXVILLE, Tenn. (WATE) – More than 430 of Tennessee’s municipalities and counties are suing two video service giants for unpaid franchise fees mandated under state law.

The lawsuit claims Netflix and Hulu have not complied with Tennessee’s Competitive Cable and Video Service Act. That law requires video service providers to be certified by the state and to pay a fee of 5% gross revenue to the municipality or county in which they earned that revenue.

The lawsuit claims the streaming giants are subject to the law because they use broadband wireline facilities that are located, at least in part, in public rights-of-way all across the state.

Netflix and Hulu are also each accused of failing to apply for a state-issued certificate of franchise authority from the Tennessee Public Utility Commission. That certificate authorizes video service providers to use the public rights-of-way.

“By failing to obtain the required authorization for providing video service in the city of Knoxville and in other Tennessee municipalities and counties, defendants have avoided their obligation to pay the franchise fee,” the lawsuit states.

The lawsuit is filed in federal court because the corporations being sued are out of state and the financials in dispute are more than $75,000. Netflix is a Delaware corporation located in Los Angeles. Hulu is a Delaware limited liability company headquartered in Santa Monica, Calif.

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