Ohio Supreme Court hears oral arguments in city’s lawsuit against Netflix, Hulu

On Apr 13, 2022

COLUMBUS, Ohio (WTVG) – The Ohio Supreme Court heard oral arguments Wednesday in a case that could change how streaming platforms operate.

The city of Maple Heights, outside Cleveland, sued Netflix and Hulu in federal court in 2020. It argues that the streaming platforms should pay local governments franchise fees similar to what cable television providers have to pay.

The federal court sent two questions to the Ohio Supreme Court to decide: Are Netflix and Hulu considered “video service providers?” Does Maple Heights have the right to challenge the companies over the issue?

No state’s supreme court has ruled on those issues. Hulu told the court that the case will have national implications.

In 2007, Ohio’s franchise fee format changed to let cable television companies install equipment like cables in municipalities to deliver their services. In exchange, local governments can charge a fee of up to 5% of the cable provider’s revenue generated from their citizens. Prior to the rule change in 2007, companies had to negotiate their rates with each individual municipality.

In recent years, “cord-cutting” has led to more people dropping traditional cable TV packages in exchange for streaming platforms like Netflix and Hulu. That’s resulted in lost revenue for local governments.

Maple Heights argues the streaming platforms should pay similar fees to those that TV providers pay because they share the same infrastructure.

The city argues that streaming platforms use the same infrastructure as cable providers to deliver their services. Netflix and Hulu say they shouldn’t be charged those fees because they simply provide the programming and they don’t own infrastructure in Ohio’s municipalities.

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