No. CITY OF DALLAS; CITY OF ABILENE; CITY OF ALLEN; CITY OF AMARILLO; CITY OF ARLINGTON; CITY OF AUSTIN; CITY OF BEAUMONT; CITY OF CARROLLTON; CITY OF DENTON; CITY OF FORT WORTH; CITY OF FRISCO; CITY OF GARLAND; CITY OF GRAND PRAIRIE; CITY OF HOUSTON; CITY OF IRVING; CITY OF LEWISVILLE; CITY OF MCKINNEY; CITY OF MESQUITE; CITY OF NACOGDOCHES; CITY OF PEARLAND; CITY OF PLANO; CITY OF ROWLETT; CITY OF SUGAR LAND; CITY OF TYLER; and CITY OF WACO,

Plaintiffv,

V. DISNEY DTC, LLC; HULU, LLC; and NETFLIX, INC.,

Defendants.

DC-22-091 28

FILED

8/3/2022 3:48 PM

FELICIA PITRE DISTRICT CLERK DALLAS CO., TEXAS Danitra Brown DEPUTY

In the District Court of

Dallas County, Texas

14th

Judicial District

PLAINTIFFS’ ORIGINAL PETITION

COME NOW the Plaintiffs, by and through their attorneys ofrecord, and file this Original

Petition againstthe Defendants and allege as follows:

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 1 of 67 PageID 43
DISCOVERY CONTROL PLAN

1. Discovery will be conducted under Level of Texas Rule ofCivil Procedure 190.4.

INTRODUCTION

2. Under Chapter 66 of the Texas Public Utility Regulatory Act (hereafter “PURA”),

Tex. Util. Code 66.001 et seq., Texas municipality can collect franchise fee from provider of video service if its programming is delivered over wireline facilities located even partly

in the

public right-of-way. See Tex. Util. Code §§ 66.005 66.002(10)—(l 1) (hereafter

“franchise

fee(s)”). For many years, providers of cable service, such as cable companies, which are also

subject

to Chapter 66, have remitted fees to Texas cities under PURA.

3. But in recent years, more Texans have shifted to subscription-based, streaming

video services like Disney DTC LLC, Hulu, LLC, and Netflix, Inc. (collectively “Defendants”)to

View television programs and movies. Despite transmitting their video programming through wireline facilities located at least in part

in the public right-of-way, Defendants have ignored their

statutory obligations to obtain state-issued certificate offranchise authority and pay the required

franchise fees, depriving Texas municipalities of the required compensation for their use of the

right-of—way.

4. PURA appliesto Defendants, just as it appliesto other companies furnishing Video

service. Defendants provide streaming “video service” to their subscribers using internet protocol

technology, which is specifically referenced in PURA. Tex. Util. Code 66.002(10) (defining

“video service” as “video programming services provided through wireline facilities located at

least in part

in the public right-of-way without regard to delivery technology, including Internet

protocol technology”). When doing so, Defendants’ programming is transmitted through wireline

facilities located at least in partin the public rights-of-way of the Plaintiff cities in which they

operate. Therefore, Defendants are “video service providers” within the meaning of PURA and

owe the Plaintiff cities franchise fees. Tex. Util. Code §66.002(11) (defining “video service

provider” as “a video programming distributor that distributes video programming services

Plaintiffs’ Original Petition Page

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through Wireline facilities located at least in part

in the public right-of-way without regard to

delivery technology”). Defendants, however, have not paid such franchise fees.

5. Plaintiffs seek to require Defendants to abide by PURA and to pay the franchise

fees owed to Plaintiffs.

PARTIES

6. The City of Dallas is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

7. The City of Abilene is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

8. The City of Allen is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

9. The City ofAmarillo is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

10. The City ofArlington is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

11. The City of Austin is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

12. The City ofBeaumont is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

Plaintiffs’ Original Petition Page

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13. The City ofCarrollton is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

14. The City of Denton is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision of video service began.

15. The City of Fort Worth is lawfully existing home-rule Texas municipal

corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and

all other applicable laws, and it has been always since Defendants’ provision of video service

began.

16. The City of Frisco is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

17. The City of Garland is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

18. The City of Grand Prairie is lawfully existing home-rule Texas municipal

corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and

all other applicable laws, and it has been always since Defendants’ provision of video service

began.

19. The City of Houston is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision of video service began.

20. The City of Irving is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision of video service began.

Plaintiffs’ Original Petition Page

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21. The City of Lewisville is lawfully existing home-rule Texas municipal

corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and

all other applicable laws, and it has been always since Defendants’ provision of Video service

began.

22. The City of McKinney is lawfully existing home-rule Texas municipal

corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and

all other applicable laws, and it has been always since Defendants’ provision of video service

began.

23. The City ofMesquite is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. ll, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision of video service began.

24. The City of Nacogdoches is lawfully existing home-rule Texas municipal

corporation Within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and

all other applicable laws, and it has been always since Defendants’ provision of video service

began.

25. The City of Pearland is lawfiilly existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since the provision of video service began.

26. The City of Plano is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since the provision of video service began.

27. The City of Rowlett is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision of video service began.

28. The City of Sugar Land is lawfiilly existing home-rule Texas municipal

corporation within the meaning of Texas Const. art. 11, Tex. Loc. Gov’t Code 9.001 et seq., and

Plaintiffs’ Original Petition Page

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 5 of 67 PageID 47
all other applicable laws, and it has been always since Defendants’ provision of Video service

began.

29. The City of Tyleris lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. ll, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since the provision ofVideo service began

30. The City of Waco is lawfully existing home-rule Texas municipal corporation within the meaning of Texas Const. art. ll, Tex. Loc. Gov’t Code 9.001 et seq., and all other

applicable laws, and it has been always since Defendants’ provision ofVideo service began.

31. Pursuant to Texas Utilities Code 66.005, Defendants are obligated to pay, and

Plaintiffs are authorized to collect, franchise fees from certain companies who transmit video

programming and other Video programming services through the public right-of-way.

32. oinder ofPlaintiffs in one action is permitted under Texas Rule ofCivil Procedure

40 and the Texas Civil Practice Remedies Code.

33. Defendant Disney DTC LLC (“Disney”)is Delaware limited liability company, with headquarters

in the State of California. The company’s primary business is its Video service, which offers online streaming of library of films and television programs, as well as the

distribution and production of original films and television series. Despite not registering to do

business in Texas, Disney indeed does business in Texas, including in the Plaintiffs’ jurisdictions,

and has always done so since at least November 12, 2019.

34. Defendant Hulu, LLC (“Hulu”)is Delaware limited liability company, with its

headquarters

in the State of California. The company’s primary businesses are its Video service, which offers online streaming of live video programming and library of films and television

programs, as well as the distribution and production of original films and television series. On March 18, 2010, Hulu registered itself to do business in Texas as foreign limited liability

company. Hulu does business in Texas, including in the Plaintiffs’ jurisdictions, and has always

done so since Hulu’s provision of Video service began.

Plaintiffs’ Original Petition Page

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35. Defendant Netflix, Inc. (“Netflix”)

is Delaware corporation with its headquarters

in the State of California. The company’s primary businesses are its Video service, which offers

online streaming of library of films and television programs, as well as the distribution and

production of original films and television series. On February l, 2002, Netflix acquired

certificate of authority to transact business in Texas. Netflix does business in Texas, including in

the Plaintiffs’ jurisdictions, and has always done so since Netflix’s provision of video service

began.

JURISDICTION AND VENUE

36. The Court has subject-matterjurisdiction under the Texas Constitution, Article V,

sections 8, as the amount in controversy exceeds the minimumjurisdictionallimits ofthe court

exclusive ofinterest, and section 24.007 of the Texas Government Code, sections 37001—37011

of the Texas Civil Practice Remedies Code (Uniform Declaratory Judgments Act), and sections

65.001, 65.011, and 65.021 of the Texas Civil Practice Remedies Code (Injunctions), and

jurisdiction to enforce Defendants’ obligation to pay franchise fees under PURA. Plaintiffs seek

reliefthat can be granted by courts of law or equity.

37. Plaintiffs have right ofaction to enforce PURA. See Tex. Util. Code §§ 66.005(b),

66.015(a)—(b), 66.016(a)—(b).

38. This Court possesses personal jurisdiction under section 17.042 of the Texas Civil

Practice Remedies Code (Texas’s long-arm statute) because the cause of action arises from

Defendants’ transactions of business within Texas.

39. Venue is proper under Chapter 15 of the Texas Civil Practice Remedies Code,

the Texas Rules of Civil Procedure, and other applicable Texas law because, inter alia, one or more Plaintiffs are within Dallas County, Dallas County is one of several counties in which the

complained-of actions occurred, and Defendants can be found and/or do business in this County.

Plaintiffs’ Original Petition Page

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 7 of 67 PageID 49
FACTUAL BACKGROUND

40. PURA allows Texas municipalities to collect franchise fees from “Video service

providers” who sell “Video service” in theirjurisdictions. Tex. Util. Code 66.005.

41. PURA defines “video service provider” as “a Video programming distributor that

distributes video programming services through wireline facilities located at least in part

in the

public right-of-way Without regard to delivery technology. This term does not include cable

service provider.” Tex. Util. Code 66.002(11).

42. PURA defines “video service” as “video programming services provided through wireline facilities located at least in part

in the public right-of-way without regard to delivery

technology, including Internet protocol technology. This definition does not include any Video

service provided by commercial mobile service provider as defined in 47 U.S.C. Section 332(d).”

Tex. Util. Code 66.00200).

43. PURA defines “video programming” as “programming provided by, or generally

considered comparable to, programming provided by, television broadcast station, as set forth in

47 U.S.C. Section 522(20).” Tex. Util. Code 66.002(9).

44. The Federal Communications Commission (“FCC”) has interpreted 47 U.S.C.

522(20)

to mean “programming comparable to that provided by broadcast television stations in

1984,” including superstations, cable networks, and pay cable whether on per channel or per

program basis. Telephone Company-Cable Television Cross-Ownership Rules, Second Report and

Order, FCC Rcd. 5781, 5820—21 1i 74 (1992). The FCC added that service will fit that definition

“to the extent service contains severable video images capable ofbeing provided as independent

video programs comparable to those provided by broadcast stations in 1984.” Id. Notably, the

definition of“video programming”is not limited to provider-driven, channel-based broadcasting.

Rather, it has for decades encompassed consumer-driven, program-based video programming.

45. Traditional television broadcast stations that existed in the 1980s include ABC,

CBS, NBC, and FOX.

Plaintiffs’ Original Petition Page

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46. The FCC has confirmed that “the mere inclusion of some interactive capability

[e.g., replay or fast-forward] should not be sufficient to transform Video programming into nonVideo programming” and reaffirmed its earlier conclusion that “Video-on-demand images”

that

involve “subscriber control” still constitute “Video programming.” Telephone Company-Cable

Television Cross-Ownership Rules, Memorandum Opinion and Order, 10 FCC Rcd. 244 103—

111 (1994). The FCC has also “held that Video distributed over the Internet qualifies as ‘Video

programming.’” Notice of Proposed Rulemaking in MB Docket No. 14-261, I/M/O Promoting

Innovation Competition in the Provision ofMultichannel Video Programming Distrib. Servs.,

29 FCC Rcd. 15995, 16002, 1] 16 n.35 (2014) (citing 2010 decision overturning contrary 2002

decision).

I. Disney, Hulu, and Netflix Distribute “Video Programming Services” to Subscribers

in Texas

47. Streaming Video has been in existence since at least the 1990s.

48. Hulu started its beta streaming Video in 2007 and began streaming video to the

public in early 2008.

49. Hulu provides streaming on-demand Video content, as well as live programming.

50. Hulu’s service includes several tiers, all of which include on-demand television

shows and movies. Certain tiers include live television shows and movies while other tiers include

no commercial videos on-demand.

51. Since 2007, Netflix has offered online, on-demand streaming of television shows, movies, documentaries, and other content to subscribers.

52. Netflix began offering the streaming service as standalone service in the United

States in November 2010 and has continued to do so without interruption through the present.

53. Defendants’ programming is comparable to programming provided by television

broadcast station and other providers of Video programming that pay franchise fees under PURA.

Defendants have not been subtle about their intentions to provide justthat.

Plaintiffs’ Original Petition Page

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54. Netflix states that it offers video programming “comparable to similarly-focused US domestic cable networks.” See Exhibit A, April 16, 2018, Shareholder Letter, at 2.

55. Netflix’s library of content has included some television series originally

premiering on television broadcast stations, such as The Blacklist, Cheers, Dynasty, Evil, Family

Guy, Frasier, Glee, Gotham, Grey’s Anatomy, Hannibal, How Met Your Mother, How to Get

Away with Murder, MacGyver, NCIS, New Girl, The Office, Rules ofEngagement, Scrubs, Star

Trek, Survivor, The Twilight Zone, Twin Peaks, and Will Grace.

56. Netflix has competed for and won awards for excellence in television programming

regarding its original television shows. For example, House ofCards was nominated for Golden

Globe® Award in 2014 and 2015 for Best Television Series Drama and was nominated for an

Emmy® Award in 2013, 2014, 2015, 2016, and 2017 for Outstanding Drama Series. Stranger

Things was nominated for Golden Globe® Award in 2017 and 2018 for Best Television Series

Drama and was nominated for an Emmy® Award in 2017, 2018, 2020 and 2022 for Outstanding Drama Series. The Crown won an Emmy® Award in 2021 for Outstanding Drama Series, beating

out fellow Netflix nominee Bridgerton and NBC nominee This is Us, among others. Cobra Kai,

The Kominsky Method, and Emily in Paris were nominated for an Emmy® Award in 2021 for

Outstanding Comedy Series alongside ABC nominee black-ish. Squid Game was nominated for

Golden Globe® Award in 2022 for Best Drama Series and was nominated for an Emmy® Award

in 2022 for Outstanding Drama Series. Ozark was also nominated for an Emmy® Award in 2022

for Outstanding Drama Series. Bridgerton won an Emmy® Award in 2021 for Outstanding Period

and/or Character Hairstyling for its episode “Art of the Swoon.” And Queer Eye won an Emmy®

Award in 2020 for Outstanding Structured Reality Program.

57. Hulu claims that its Video programming is Viable alternative to cable and

broadcast television. As one of Hulu’s executives putit in Hulu press release, “Hulu is the

complete TV experience for consumers, offering both live and on-demand programming and more

consumer choice than ever before.” Exhibit B, May 2, 2018, Press Release.

Plaintiffs’ Original Petition Page 10

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58. Hulu subscribers have been able to watch shows from networks that include, among

others, ABC, CBS, FOX, NBC, TBS, TNT, and MTV.

59. Hulu has also aired some current-season episodesthe day after they air on television

broadcast stations, such as Saturday Night Live, Family Guy, The Voice, The Masked Singer, This

is Us, Chicago P.D., Debris, Big Sky, and The Simpsons.

60. Hulu has also aired some television series originally premiering on television

broadcast stations, such as The Brady Bunch, Cheers, Family Matters, Frasier, Full House, The

Golden Girls, How Met Your Mother, Love Lucy, The Mary Tyler Moore Show, *A *S*H*, Modern Family, The Odd Couple, Perfect Strangers, Saved by the Bell, 30 Rock, Wings, and The Wonder Years.

61. For the shows originally airing on traditional television broadcast stations that later

appear on Hulu, the bulk of the content ofthose shows is the same.

62. Subscribers to Hulu’s Hulu +Live TV tier currently receive access to over 75

channels oflive television.

63. Hulu has competed for, and won, awards for excellence in television programming

regarding its original television shows. For example, The Handmaid’s Tale won Golden Globe®

Award in 2018 for Best Television Series Drama and won an Emmy® Award in 2017 for

Outstanding Drama Series. It was nominated for an Emmy® Award in 2021 for Outstanding Drama Series. Pen15 was nominated for an Emmy® Award in 2021 for Outstanding Comedy

Series. Only Murders in the Building was nominated for Golden Globe® Award in 2022 for Best Musical/Comedy Series and was nominated for an Emmy® Award in 2022 for Outstanding

Comedy Series in competition with fellow-nominee Abbott Elementary that appears on ABC. Also

nominated for Golden Globe® Award in 2022 for Best Musical/Comedy Series was Hulu show

The Great. And Dopesick was nominated for Golden Globe® Award in 2022 for Best Television Motion Picture.

64. Disney, through its Disney+ service, “offers commercial-free programming with

Plaintiffs’ Original Petition Page

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variety of original feature-length films, documentaries, live-action and animated series, and shortform content.” Exhibit C, April 8, 2020, Press Release.

65. Disney+ streaming service includes episodes oftelevision shows that are available

for streaming after originating on traditional broadcast networks. At various times, Disney+ has

been able to provide its users with episodes of The Simpsons, DuckTales, Schoolhouse Rock,

Adventures ofGummi Bears, The Muppet Show, and Boy Meets World.

66. At various times, Disney+ has been able to provide its users with episodes ofLizzie McGuire, That’s So Raven, Hannah Montana, Wizards of Waverly Place, Liv and Maddie, and

Austin Ally.

67. Disney+ has competed for awards for excellence in television programming

regarding its original television shows. For example, The Mandalorian was nominated for

Golden Globe® Award in 2021 for Drama TV Series and was nominated for an Emmy® Award

in 2020 and 2021 for Outstanding Drama Series. Chip ‘n Dale: Rescue Rangers was nominated

for an Emmy® Award in 2022 for Outstanding Television Movie. And The Beatles: Get Back was

nominated for an Emmy® Award in 2022 for Outstanding Documentary or Nonfiction Series.

68. All Defendants charge subscribers fee to access their video programming. To

stream Netflix’s Video programming, Netflix subscribers must subscribe to one of three monthly

plans: $9.99 basic plan that allows subscribers to watch programming on one device at time in

480p resolution, $15.49 standard plan that allows subscribers to watch programming on two

devices at time in 1080p resolution, or $19.99 premium plan that allows subscribers to watch

programming on four devices at time in 4K and HDR resolution.

69. To stream Hulu’s on-demand video programming, Hulu subscribers similarly must

subscribe to monthly plan. The current basic $6.99 plan is advertisement-supported, meaning it

includes commercials. For $12.99 per month, subscribers can receive Hulu’s programming without

commercials.

70. Hulu also currently offers service for $69.99 per month called Hulu Live TV

Plaintiffs’ Original Petition Page 12

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now with Disney+ and ESPN+. It combines access to Hulu’s on-demand streaming libraries with

live programming from over 75 TV channels, including the most popular sports, news, and

entertainment channels. Hulu also offers the Hulu Live TV now with Disney+ and ESPN+ plan without commercials for $75.99 per month. Additionally, Hulu offers other “add-on” features,

including,

inter alia, HBO, Cinemax, Showtime, STARZ, and enhanced DVR capabilities.

71. Disney currently offers Disney+,its Video-programming service, for $7.99 per month, or $79.99 per year. Disney also offers Disney+ bundled with ESPN+ (a sports-streaming

program) and Hulu’s basic, advertisement-supported on-demand service for $13.99 per month (or

$19.99 per month with no advertisements).

72. Defendants compete with cable television companies and with television broadcast

stations like ABC, CBS, NBC, and FOX for viewers.

73. In short, Defendants generate revenues by charging their subscribers to View

professionally produced and copyrighted television shows, movies, documentaries, and other

programming. Defendants therefore distribute “video programming” services to their subscribers

in Texas. See Tex. Util. Code §66.002(9) (defining “video programming” as “programming

provided by, or generally considered comparable to programming provided by, television

broadcast station, as set forth in 47 U.S.C. Section 522(20)”).

II. Disney, Hulu, and Netflix Provide Video Programming Services “Through Wireline

Facilities Located at Least in Part in the Public Right-of-Way”

74. Defendants transmit their video programming services through wireline facilities

located at least in partin the public right-of-way.

75. Subscribers view Defendants’ video programming using devices—including,inter

alia, smart televisions, streaming media players like Roku or Apple TV, and set-top boxes from

cable and satellite providers—that have software enabling them to stream Defendants’ Video

programming. See, e.g., Exhibit D, How does Nefilix work? When subscriber wants to watch Netflix, Hulu, or Disney+, the companies deliver the video programming to the subscriber via

Plaintiffs’ Original Petition Page 13

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internet protocol technology.

76. To deliver Video programming, Defendants push their programming over local

internet—service providers’ local broadband facilities. This transmission takes place on Wireline

facilities within the public right-of-way, i.e., the area on, below, or above public roadway,

highway, street, public sidewalk, alley, waterway, or utility easement in which the municipality

has an interest. Tex. Util. Code 66.002(8). Such Wireline facilities are commonly located on

utility poles or underground in such areas.

77. All Defendants provide Video programming services through Wireline facilities

located at least in part

in the public right-of-way and, in some instances, entirelyin the public rightof-way.

III. This Lawsuit Seeks the Recovery of Franchise Fees from Disney, Hulu, and Netflix, Who Have Failed t0 Pay Fees Despite Meeting the Statutory Definition of “Video

Service Provider” Who Sells “Video Service”

78. Because Defendants distribute Video programming through “Wireline facilities

located at least in part

in the public right-of-way,” they are “Video service providers” selling “Video

service” under PURA. Tex. Util. Code 66.002(10)—(11). No exclusion applies, and Defendants

are not commercial mobile service providers as defined by 47 U.S.C. 332(d). Defendants must

therefore pay franchise fees to Plaintiff municipalities under Texas Utilities Code 66.005.

79. Defendants have failed to comply with PURA by failing to seek state-issued

certificate offranchise authority as required (Tex. Util. Code 66.003) and failing to pay franchise

fees to the Plaintiff municipalities (Tex. Util. Code 66.005). This lawsuit seeks, among other

things, declaration that Defendants are subject

to PURA and follow-on equitable relief for the

recovery of unpaid franchise fees for Plaintiffs.

80. In addition to owing Plaintiffs franchise fees under state statutory causes of action, Defendants’ unjust enrichment also violates the Gift Clauses of the Texas Constitution, which this

Court must enforce.

81. From the beginning, the Texas Constitution has zealously preserved the resources

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and power ofthe government, especially in its prohibition ofgiving away public fimds or resources

to further private enterprise. These provisions of the Texas Constitution are known as the Gift

Clauses.

82. Specifically, the Gift Clauses of the Texas Constitution prohibitthe collection or

expenditure of public money for anything other than public purposes. “Taxes shall be levied and

collected by general laws and for public purposes.” Tex. Const. art. VIII, 3. “No appropriation

for private or individual purposes shall be made, unless authorized by this Constitution.” Tex.

Const. art. XVI, 6(a).

83. Similarly, Sections 50, 51, and 52 of Article III, and Section of Article XI of the

Texas Constitution provide that neitherthe Legislature nor any county, city, town, or other political

subdivision may grant or donate public money or thing of value to any individual, association of

individuals, or corporation. See Tex. Const. art. III, 50 (“The Legislature shall have no power

to

give or to lend, or to authorize the giving or lending, of the credit of the State in aid of, or to any

person, association or corporation, whether municipal or other. .”); Tex. Const. art. III, 51

(“The Legislature shall have no power

to make any grant or authorize the making of any grant of

public moneys

to any individual, association of individuals, municipal or other corporations whatsoever. .”); Tex. Const. art. III, 52(a) (“the Legislature shall have no power

to authorize

any county, city, town or other political corporation or subdivision of the State to lend its credit or

to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever. .”); Tex. Const. art. XI (“No county, city, or other municipal corporation shall

hereafter become subscriber to the capital of any private corporation or association, or make any

appropriation or donation to the same ”)

84. The Texas Supreme Court has found that the purposes of article III, sections 51 and

52 and article XVI, section are “to preventthe application of public funds to private purposes.”

Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 739—40 (Tex. 1995) (citation omitted). In

other words, it “prohibits the expenditure ofpublic funds for private gain.” Graves v. Morales, 923

Plaintiffs’ Original Petition Page 15

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S.W.2d 754, 757 (Tex. App—Austin 1996, writ denied); see also Tex. Mun. League

Intergovernmental Risk Pool v. ex. Workers’ Comp. Comm ’n, 74 S.W.3d 377, 383 (TeX. 2002)

(“We have held that section 52(a)’s prohibiting the Legislature from authorizing political

subdivision ‘to grant public money’ means that the Legislature cannot require gratuitous payments

to individuals, associations, or corporations”) (emphasis

in original); Texas v. City ofAustin, 160

Tex. 348, 355 (1960) (finding the purpose of article III, section 51 and article XVI, section is “to

prevent

the gratuitous grant of [public] fimds to any individual or corporation whatsoever”).

85. Fulfilling the obligations of the Gift Clauses when it comes to the use of public

rights of way by Video service providers, the Texas Legislature enacted Chapter 66 of PURA,

establishing that the usage of municipal public rights-of-way by Defendants was not to go

uncompensated. Accordingly, Defendants’ uncompensated usage of municipal public rights-of- way ultimately benefits only Defendants, which are private parties, in Violation ofthe Gift Clauses.

Defendants do not pay, and have not paid, franchise fees to Plaintiffs, and thus are using Plaintiffs’ municipal public rights-of-way in Violation of the Gift Clauses.

COUNT ONE—REQUEST FOR DECLARATORY RELIEF

86. Plaintiffs repeat and incorporate by reference every allegation contained in the

preceding paragraphs as iffully set forth herein.

87. Pursuant to Chapter 37 of the Civil Practice and Remedies Code, the Court should

declare the following:

87.1. Defendants are subjectto PURA.

87.2. Defendants are engaged in the business of providing video service in

Plaintiffs’ geographic areas within the meaning of Chapter 66 of PURA.

Tex. Util. Code 66.001 et. seq. Defendants derive “gross revenues” from

their business (as defined by Tex. Util. Code 66.002(6)), and they have

engaged in their business and derived “gross revenues” from their business

always since the provision of video service began.

Plaintiffs’ Original Petition Page 16

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 16 of 67 PageID 58
87.3. Defendants have failed to obtain state-issued certificate of franchise

authority from the Texas Public Utility Commission as required by Tex. Util. Code 66.003(a).

87.4. Defendants have failed to submit accountingsto Plaintiffs, as required by PURA.

87.5. Defendants have failed to pay franchise fees to Plaintiffs, as required by PURA.

87.6. Defendants’ failure to pay franchise fees to Plaintiffs unjustly enriches

Defendants at the expense of Plaintiffs and violates the Gift Clauses of the

Texas Constitution.

87.7. Defendants’ failure to pay franchise fees to Plaintiffs constitutes trespass

against Plaintiffs under Texas common law and the Texas Constitution.

87.8. All such other declarations as are consistent with the reliefrequested herein

or which is otherwise just and proper under the circumstances.

COUNT TWO—REQUEST FOR INJUNCTIVE RELIEF

88. Plaintiffs repeat and incorporate by reference every allegation contained in the

preceding paragraphs as iffully set forth herein.

89. Plaintiffs do not have an adequate remedy at law. Defendants’ Violations ofPUM

and the Texas Constitution are continuing, and Plaintiffs would be required to bring successive

actions to enforce compliance and to collect unpaid fees.

90. Unless Defendants are enjoined from Violating the applicable statutes and

constitutional provisions, Plaintiffs will continue to suffer irreparable harm or injury. Plaintiffs are

being deprived ofthe required compensation for Defendants’ usage ofthe municipal public rightsof-way needed to protect

the public health, safety, and welfare of their citizens. Because

Defendants intend to continue engaging in business within the jurisdictionallimits of Plaintiffs

and this Court, and deriving grossrevenues from their business, Plaintiffs will continue to be

Plaintiffs’ Original Petition Page 17

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 17 of 67 PageID 59
deprived offranchise fees unless Defendants are so enjoined. Plaintiff municipalities’ recovery of

statutorily required franchise fees is in the public interest.

91. Pursuant to Chapters 37 and 65 ofthe Civil Practice and Remedies Code, the Court

should permanently enjoin Defendants from using municipal public rights-of-way Without

contemporaneous and continuous compliance with all applicable provisions of the Texas

Constitution and PURA.

COUNT THREE—REQUEST FOR AN ACCOUNTING

92. Plaintiffs repeat and incorporate by reference every allegation contained in the

preceding paragraphs as iffully set forth herein.

93. Defendants have duty to keep and maintain accurate books and records pertaining

to the franchise fees owed to Plaintiffs. See Tex. Util. Code 66.005(b). Upon information and

belief, Defendants have not kept sufficient books and records necessary to calculate back-franchise

fees owed for all prior years.

94. Defendants have not accounted to Plaintiffs for the franchise fees owed to Plaintiffs.

95. The Court should require Defendants to remit an accounting to Plaintiffs,in

accordance with PURA.

COUNT FOUR—TRESPASS

96. Plaintiffs repeat and incorporate by reference every allegation contained in the

preceding paragraphs as iffully set forth herein.

97. To the extent Defendants are found not liable under PUM for any reason, Defendants have committed trespass against Plaintiffs under Texas common law and the Texas

Constitution.

98. Plaintiffs are both the owners and possessors of public right-of-way land Within

their respective boundaries.

99. Defendants have wrongfully entered and used Plaintiffs’ respective rights-of-way

by delivering video programming to Texas customers Without obtaining the proper state-issued

Plaintiffs’ Original Petition Page 18

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 18 of 67 PageID 60
certificate of franchise authority from the Texas Public Utility Commission, Without obtaining

authorization from Plaintiffs, and without paying franchise fees or any other remuneration to

Plaintiffs for such unauthorized use.

100. Defendants have intentionally and knowingly trespassed upon these public rightsof—way. Defendants have operated, and continue to operate, for-profit businesses in which their

utilization of Plaintiffs’ public rights-of-way are central to their ability to generate profitsfrom

their sales to Texas customers. Defendants are aware ofhow their video delivery mechanisms work

and understand that they have been using the public rights-of-way to affect such delivery. Defendants’ intrusions upon the public rights-of-way are no innocent or inadvertent trespasses but

are instead purposely directed to Plaintiffs’ respective propertiesto enable Defendants to

wrongfully profit on the backs of Plaintiffs and their citizens.

101. Defendants’ trespass upon Plaintiffs’ property has damaged, and continues to

damage, Plaintiffs.

COUNT FIVE—UNJUST ENRICHMENT AND MONETARY RELIEF

102. Plaintiffs repeat and incorporate by reference every allegation contained in the

preceding paragraphs as iffully set forth herein.

103. Defendants have operated as video service providers

in the geographic areas of

Plaintiffs.

104. By not remitting franchise fees or any other sort ofremuneration, Defendants have

received the benefits of doing business in Plaintiffs’ jurisdictions without paying required fees,

have been aware that they were doing business Without paying required fees and have accepted

and retained these benefits under circumstances that are inequitable or unjust,1'. e., by depriving

Plaintiffs of monies due under the statutes, codes, and provisions oflaw that Defendants refuse to

honor.

105. Defendants owe all Plaintiffs franchise fees, together with compounded interest

(pre-judgment and post-judgment) and penalties, because of their failure to comply with the

Plaintiffs’ Original Petition Page 19

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 19 of 67 PageID 61
applicable statutes, codes, and provisions oflaw since the provision ofvideo service began and for

the duration ofthis litigation.

COUNT SIX—REQUEST FOR ATTORNEY’S FEES

106. Plaintiffs have incurred and will continue to incur costs and attorney’s fees needed

for the investigation and prosecution of these claims. Plaintiffs’ counsel should recover these fees

and expenditures pursuantto applicable law.

PRAYER FOR RELIEF

107. WHEREFORE, PREMISES CONSIDERED, Plaintiffs respectfully requestthat

the Court award the following relief:

108. That the Court declare and adjudge that Defendants are subjectto PURA and have

failed to comply with its requirements including,inter alia, obtaining the required state-issued

certificate offranchise authority and remitting to Plaintiffs the franchise fees owed.

109. That the Court declare and adjudge that Defendants’ uncompensated use of the

public right-of-way violates the Gift Clauses of the Texas Constitution.

110. That the Court adjudge that Defendants’ unauthorized use of the public right-of- way caused Defendants to be unjustly enriched, as they avoided fees that should have been paid to

Plaintiffs since the provision of Video service began and for the duration ofthis litigation.

111. That the Court adjudge that Defendants’ have trespassed upon Plaintiffs’ property

since the provision of Video service began and for the duration of this litigation.

112. That the Court order an accounting of all monies that Defendants owe Plaintiffs,

including compounded interest (pre-judgment and post-judgment).

113. That the Court award Plaintiffs money damagesfor the amounts that Defendants

have been unjustly enriched at Plaintiffs’ expense, including compounded interest (pre-judgment

and post-judgment) and penalties.

114. That the Court award Plaintiffs compensatory and punitive damagesfor trespass

in

an amount to be proven at trial and as the jury deems appropriate, including compounded interest

Plaintiffs’ Original Petition Page 20

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 20 of 67 PageID 62
(pm-judgment and post-judgment) and penalties.

115. That the Court hold full trial on the merits, and, after the trial, grant permanent

injunction against Defendants requiring regular accountings, timely remittance of franchise fees

to Plaintiffs, and enjoining and restraining Defendants from engaging in business Within the

boundaries of Plaintiffs and deriving grossrevenues therefrom Without obtaining the required

state-issued certificate of franchise authority and without paying the required franchise fees.

116. That the Court hold full trial on the merits, and, after the trial, permanent

injunction be granted against Defendants enjoining and restraining Defendants from fiirther

trespass upon Plaintiffs’ property.

117. Plaintiffs also seek attorney’s fees under Chapter 37 of the Civil Practices and

Remedies Code, plustheir costs of court and expenses, including expert witness fees.

118. Plaintiffs also seek such other relief to which the Court determines Plaintiffs are

entitled or which is otherwise just and proper under the circumstances.

REQUEST FOR DISCLOSURE

119. Plaintiffs requestthat Defendants disclose, within 50 days of the service of this

request, the information or material described in Texas Rule of Civil Procedure 194.2.

/s/ Steven Wolens Steven D. Wolens Texas Bar No. 21847600 Gary Cruciani Texas Bar No. 05177300 MCKOOL SMITH, P.C. 300 Crescent Court, Ste. 1500 Dallas, TX 75201 Phone: (214) 978-4000

swolens@mckoolsmith.com

gcruciani@mckoolsmith.com

Plaintiffs’ Original Petition Page 21

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 21 of 67 PageID 63
/s/Austin R. Nimocks Austin R. Nimocks Texas Bar No. 24002695

Johnny K. Sutton

Texas Bar No. 19534250

Luis A. Reyes Texas Bar No. 90001831 Christopher L. Peele Texas Bar No. 24013308 Cory R. Liu

Texas Bar No. 24098003 ASHCROFT SUTTON REYES LLC

919 Congress Ave, Ste. 1325 Austin, TX 78701 Phone: (512) 370-1800

animocks@ashcroftlawfirm.com

jsutton@ashcroftlawfirm.com

1reyes@ashcroftlawfirm.com

cpee1e@ashcroft1awfirm.com

c1iu@ashcroft1awfirm.com

Steven M. Berezney (application for admission pro

hac vice pending) Missouri Bar No. 56091 Garrett R. Broshuis (application for admission pro

hac vice pending) Missouri Bar No. 65805 KOREIN TILLERY LLC

505 N. 7th St, Ste. 3600

St. Louis, MO 63101 Phone: (314) 241-4844

Fax: (314) 241-1854

sberezney@koreintillery.com

gbroshuis@koreinti11ery.corn

Attorneys for Plaintiffis

On Behalf of City of Dallas Christopher

J. Caso

Texas Bar No. 03969230 CITY 0F DALLAS

1500 Marilla St., Ste. 7DN

Dallas, TX 75201

(214) 670-3519 Chris.caso@dallascityhall.com

Plaintiffs’ Original Petition Page 22

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 22 of 67 PageID 64
On Behalf of City ofAbilene

Stanley E. Smith

Texas Bar No. 00791694 CITY 0F ABILENE

555 Walnut St, Ste. 208 Abilene, TX 79601

(325) 676-6251

stanley.smith@abilenetx.gov

On Behalf of the City of Amarillo Bryan McWilliams Texas Bar No. 24049776 CITY 0F AMARILLO

601 S. Buchanan Amarillo, TX 79101

(806) 378-3000 bryan.mcwilliams@amarillo.gov

On Behalf of the City of Arlington

Teris Solis Texas Bar No. 02899850 David Johnson

Texas Bar No. 24060026 CITY 0F ARLINGTON Mail Stop 63-0300

101 S. Mesquite St., Ste. 300 Arlington, TX 76010

(817) 459-6878

teris.solis@arlingtontx.gov

On Behalf of the City of Austin Anne L. Morgan City Attorney Texas Bar No. 14432400 CITY 0F AUSTIN

Law Department P.O. Box 1088 Austin, TX 78767-1088

(512) 974-2268

anne.morgan@austintexas.gov

Plaintiffs’ Original Petition Page 23

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 23 of 67 PageID 65
On Behalf of the City of Beaumont Sharae N. Reed City Attorney Texas Bar No. 24068467 CITY 0F BEAUMONT P.O. Box 3827 Beaumont, TX 77704-3 827

(409) 880-3715

sharae.reed@beaumonttexas.gov

On Behalf of City of Carrollton Meredith A. Ladd

Texas Bar No. 24003368 CITY 0F CARROLLTON

1945 E. Jackson Rd. Carrollton, TX 75006

(972) 466-3000 meredith.1add@cityofcarrollton.com

On Behalf of City of Denton Mack P. Reinwand

Texas Bar No. 24056195 CITY 0F DENTON

215 E. McKinney St. Denton, TX 76201

(940) 349-8333 mack.reinwand@cityofdenton.com

On Behalf of City of Fort Worth

Laetitia Coleman Brown

Texas Bar No. 00792417 CITY 0F FORT WORTH

City Hall 200 Texas St. Fort Worth, TX 76102

(817) 392-7600

laetitia. coleman@fortworthtexas.gov

Plaintiffs’ Original Petition Page 24

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 24 of 67 PageID 66
On Behalf of City of Frisco Richard M. Abernathy Texas Bar No. 00809500 CITY 0F FRISCO

Abernathy, Roeder, Boyd Hullett P.C. 1700 Redbud B1Vd., Ste. 300 McKinney, TX 75069

(214) 544-4000

rabernathy@abernathy-law.com

On Behalf of City of Garland Brian England

Texas Bar No. 24059722 CITY 0F GARLAND

200 N. Fifth St. Garland, TX 75040

(972) 205-2380 bengland@garlandtx.gov

On Behalf of City of Grand Prairie Megan Mahan

Texas Bar No. 24061203 CITY 0F GRAND PRAIRIE P.O. Box 534045 Grand Prairie, TX 75053

(972) 237-8026 mmahan@gptx.org On Behalf of City of Houston Arturo Michel Texas Bar No. 14009440 YuShan Chang Texas Bar No. 24040670 CITY 0F HOUSTON

Legal Department 900 Bagby St., 4th Fl. Houston, TX 77002

(832) 393-6442

arturo.michel@houstontx.gov

yushan.chang@houstontx.gov

Plaintiffs’ Original Petition Page 25

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 25 of 67 PageID 67
On Behalf of City of Houston Ana Hernandez Texas Bar No. 24046062 CITY 0F HOUSTON

Ana Hernandez Associates, PLLC

4101 Washington Ave. Houston, TX 77007

(713) 337-3930

ana@anahlaw.com

On Behalf of City of Irving Kuruvilla Oommen City Attorney Texas Bar No. 24007780

Janet Spugnardi Deputy City Attorney Texas Bar No. 24039192 CITY 0F IRVING

825 W. Irving Blvd.

Irving, TX 75060

(972) 721 -2541 x3656

koommen@cityofirving.org

jspugnardi@cityofirving.org

On Behalf of City of Lewisville

Lizbeth I. Plaster City Attorney Texas Bar No. 00787750 CITY 0F LEWISVILLE P.O. Box 299002

Lewisville, TX 75029-9002

(972) 219-5059

lplaster@cityoflewisville.com

On Behalf of City of McKinney Mark S. Houser Texas Bar No. 10049500 CITY 0F MCKINNEY Brown Hofrneister, L.L.P. 740 East Campbell Rd., Ste. 800 Richardson, TX 75081

(214) 747-6100 mhouser@bhlaw.net

Plaintiffs’ Original Petition Page 26

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 26 of 67 PageID 68
On Behalf of City of Mesquite David L. Paschall Texas Bar No. 15553800 CITY 0F MESQUITE

1515 N. Galloway Ave. Mesquite, TX 75149

(972) 216-6272 dpaschall@cityofmesquite.com

On Behalf of City ofNacogdoches Steven Kirkland City Attorney Texas Bar No. 1522200 CITY 0F NACOGDOCHES P.O. Box 635030 Nacogdoches, TX 75963

(936) 559-2503

kirklands@nactx.us

On Behalf of City of Pearland Darrin M. Coker Texas Bar No. 00795023 CITY 0F PEARLAND

3519 Liberty Dr. Pearland, TX 77581

(281) 652-1600 dcoker@pearlandtx.gov

On Behalf of City of Plano Paige Mims Texas Bar No. 00787550 CITY 0F PLANO

1520 Ave, Ste. 340 Plano, TX 75074

(972) 941-7125 paigem@plano.gov

Plaintiffs’ Original Petition Page 27

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 27 of 67 PageID 69
On Behalf of City of Rowlett David Berman

Texas Bar N0. 02206990 CITY 0F ROWLETT Nichols, Jackson, Dillard, Hager Smith

1800 Ross Tower 500 N. Akard St. Dallas, TX 75201

(214) 965-9900 dbelman@njdhs.com

On Behalf of City of Sugar Land Meredith Riede

Texas Bar No. 24025614 CITY 0F SUGAR LAND

P.O. Box 110 Sugar Land, TX 77487-0110

(281) 275-2700 mriede@sugarlandtx.gov On Behalf of City of Tyler Deborah Pullum

City Attorney Texas Bar No. 00797269 CITY 0F TYLER

P.O. Box 2039 Tyler, TX 75710

(903) 531-1161 dpullum@ty1ertexas.com

On Behalf of City of Waco

Jennifer Richie

Texas Bar No. 24007916 CITY 0F WACO

P.O. Box 2570 Waco, TX 76702

(254) 750-5680

jenniferr@wacotx.gov

Plaintiffs’ Original Petition Page 28

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 28 of 67 PageID 70
Exhibit

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 29 of 67 PageID 71
April 16, 2018

Fellow shareholders,

We strive to entertain and to bring joy to people across the world through amazing stories. Our 125 million members provided us with $3.6 billion in streaming revenue in Ql. Ourjob is to spend this money wisely to increase our members’ delight.

NETFLIX

hmmwfimmfll (11'11 m7 (3'17 “‘17 Q1!!! 02'.“

Total (Including DVD): Revenue 2,637 2,785 2,985 3,286 3,701 3,934 YN 96 Growth 34.7% 32.3% 30.3%| 32.6% 40.4% 41.2%

Operating Income 257 128 _209' 245_ .5 447

459 Operating Margin 9.7% 4.6% 7.0% 7.5% 12.1% 11.9%

Netlncome 178 66 130 186 S_ 290 358 Diluted EPS 0.40 0.15 0.29 0.41 0.64 0.79

Ionl Streaming: Revenue 2,516 2,671 2,87S| 3,181 3,602 3,841 WV 96 Growth 38.896 35.8% 33.2%] 35.3% 43.296 43.896 Era Memberships 94.36 9304 104._02|_

110.64 11a_.90 125.00

Total Memberships 98.75 103.95 109.25l 117.58 125.“) 131.20 Net Additions 4.95 5.20 5.30 8.33 7.41 6.20 US Streaming: Revenue 1,470 1,505 1:547. 1,630 1,8211. 3_ 1,898 Cintflbution

Profit 606 560 554' 561 697 $— 751 MrlbutlorlMargln 41.2% 37.2% 35.8% 34.4% 38.i 39.6%

Paid Memberships 49.38 50.32 51.35 52.81 55.09 56.29

Total Memberships 50.85 51.92 52.77I 54.75 56.71 57.91 EAddltions

1.42 1.07 0.85 1.987 _1.96_ 1.20

Internatlonal Streamlng: fievenue 1,046 1,165 1,327] 1,550 _$ 1,782 ,5 1,943 Contribution Profit(l.oss) 43 (13) 62i 135 2_72 274 gontfiyion Margin 4.19:. 4.195 4.793] 8.7% _15£’*._, 14.1%

Paid Memberships 44.99 48.71 52.68I 57.83 63.82 68. 72 Total Memberships 47.89 52.03 56.48 62.83 68.29 73.29 pet Additions 3.53 4.14 4.45 636‘ 54; 5.00 Consolidated: Nettash (used In] operaflngacflvitlcs (344) (535) (420) (488) [L371

Free Cash Flow (423} (608) (465) (524) 12871

EBI'I'DA 317 190 273 313 $_ _534

_Shar_es

(70) 445.5 446; 447.4 4433 450.4

étreaming Content Obligation? (58) 15.3 15.7 717.7 17.9

‘Cotresponds to our total known streaming content obligations as defined in our Mmhi statements and related notes in our most recently filed SEC Form 10-!

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 30 of 67 PageID 72
Q1 Results and Q2 Forecast Revenue grew 43% year over year in Ql, the fastest pace in the history of our streaming business, due to

25% increase in average paid streaming memberships and 14% rise in ASP. Operating margin of 12%

rose 232 bps year over year. This was higherthan our beginning of quarter guidance, due primarily to

the timing of content spend. Diluted EPS of $0.64 vs. $0.40 included $41m non-cash unrealized loss

from F/X remeasurement on our Eurobond.

Global net adds totaled new Ql-record of 7.41m, up 50% year over year and ahead of our 6.35m

forecast. The variance relative to our guidance was driven by continued strong acquisition trends across

the globe which we attribute to the growing breadth of our content and the worldwide adoption of

internet entertainment.

In the US, we added 1.96m memberships (compared with forecast of 1.45m). We completed our price adjustment during this past quarter, resulting in 12% ASP growth for the domestic segment. Outside of

the US, membership grew by 5.46m (vs. forecast of 4.90m). Our international segment now accounts for 50% of revenue and 55% of memberships. Excluding F/X impact of +5114 million, international

revenue and ASP rose 59% and 13% year over year, respectively.

As reminder, the quarterly guidance we provide is our internal forecast at the time we report. For Q2, we expect 6.2 million global net additions (1.2m in the US and 5.0m for the international segment) vs. 5.2 million in the year ago quarter. QZ operating margin is expected to be 12%. We are now targeting

full year operating margin of 10%—11%. We continue to anticipate content and marketing spend to be weighted towards the second half of 2018.

Content We’ll have $7.5-$8 billion of content expense (on P&L basis)

in 2018 across wide variety of formats

(series, films, unscripted, docs, comedy specials, non-English language) to serve the diverse tastes of our

growing global membership base. Ql scripted original series debuts included the dark, coming of age story The End of the F***ing World

and sci-fi thriller Altered Carbon as well as returning seasons of Marvel’s Jessica Jones, Grace and

Frankie, Santa Clarita Diet and Series of Unfortunate Events.

Last year, we expanded our efforts in original programming to unscripted shows across several genres. Our output

in this area is now comparable to similarly-focused US domestic cable networks. Shows like Queer Eye and Nailed It are great examples of our ambitions in this area: engaging, buzz-worthy shows

that drive lots of enjoyment around the world.

Our investment in international production continued to increase with big, non-English originals like Mecanismo {The Mechanism). Loosely inspired by real events and from Narcos creator José Padilha, this drama is tracking to be one of our most viewed originals in Brazil. We are also seeing more examples of non-English content transcending borders. This quarter, La Casa de Papel (Money Heist in English

NlET'FLIX

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 31 of 67 PageID 73
language territories), Spanish language heist thriller, became the most watched non-English series on Netflix ever.

On Super Bowl Sunday, we surprise-announced and launched The CIoven‘ie/d Paradox, the third film in

the Cloverfield franchise. Through tight coordination among our original film, product, marketing and PR

teams, the event showcased how big branded film can be marketed and delivered to consumers

instantaneously across the globe without wait for the theatrical window. Outside of North America, we premiered the Alex Garland—directed Annihilation, starring Natalie Portman, just weeks after its US

theatrical debut and it has enjoyed large audiences in nearly every country for us. We also released

broad range of original films: from Benji for kids and families; to the Seth Rogen/Evan Goldberg produced comedy Game Over, Man; to the Sundance hip-hop biopic Roxanne, Roxanne. We regret our films not being able to compete at this year's Cannes film festival. The festival adopted new rule that means if film is in competition at Cannes,

it can not be watched on Netflix in France for

the following three yearsl. We would never want to do that to our French members. We will continue to

celebrate our films and filmmakers at other festivals around the world but unfortunately we will have to

sit out Cannes for now so that our growing French membership can continue to enjoy our original films.

This past quarter, we signed an overall deal with Ryan Murphy, the prolific hit-maker behind American

Crime Story: The People vs. OJ Simpson, Nip/Tuck, Glee, American Horror Story and many others. This

comes on the heels of similar partnerships with Shonda Rhimes, Shawn Levy and Jenji Kohan. While

these overall deals are substantial investment for us, they allow us to work directly with prolific and

talented creators with proven track record of success. Instead of having to license their shows for

finite period from outside suppliers, we will own the projects we produce with them. This approach also

allows us to reduce our reliance on third-party studios and forego the corresponding license premiums we’ve historically paid. We were proud to celebrate our first feature Academy Award with Bryan Fogel and Dan Cogan, makers of our documentary Icarus. We’re thrilled when the creators with whom we partner are recognized for

their exceptional work. The Oscar win helps to reinforce that Netflix is great home for both documentary lovers and creators. Marketing We’re investing in more marketing of new original titles to create more density of viewing and

conversation around each title (i.e bigger hit in nation or demographic). We believe this density of

viewing helps on both retention and acquisition, because it makes our original titles even less

substitutable. Because we operate in so many countries, we are able to try different approaches in different markets, and continue to learn.

Specifically, the Cannes festival’s new rule is that French theatrical opening is required of films in competition, and French

law in essence requires that if film is in French theatres, then it cannot be on an SVOD service in France for 36 months. While

in other countries we can offer simultaneous exhibition in theatres and on Netflix, that is not permitted in France, so we have

to be Netflix-only for our films in France. NlETFLIX

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 32 of 67 PageID 74
Product and Partnerships

Last year, we launched bundle offers with Proximus (in Belgium), SFR Altice (France) and T-Mobile (US). They have proven to be very successful and we are now adding similar bundle offers with additional MVPD partners. Recently, we announced that we are bundling the Netflix service with packages from

Sky which will begin later this year and with Comcast in the US, which are currently being rolled out. These relationships allow our partners to attract more customers and to upsell existing subscribers to higher ARPU packages, while we benefit from more reach, awareness and often,

less friction in the

signup and payment process. We believe that the lower churn in these bundles offsets the lower Netflix ASP. We remain primarily direct-to-consumer business, but we see our bundling initiative as an

attractive supplemental channel.

In March, we rolled out additional features providing members with greater information and control over their Netflix viewing. While we had already offered PIN protection for all content at certain maturity level, there is now parental PIN control for individual movies and shows. These new features are part of our ongoing effort to give our members tools to manage how they and their families enjoy Netflix.

Free Cash Flow and Capital Structure

Free cash flow in Q1 was -$287 million (less negative than we expected due to content payment timing differences), compared with -$524 million in Q4’17. We continue to forecast free cash flow of -$3 to -$4 billion in 2018, and to be free cash flow negative for several more years as our original content spend

rapidly grows. We have about $2.6 billion in cash and we will continue to raise debt as needed to fund our increase in original content. Our debt levels are quite modest as percentage of our enterprise value, and we believe the debt is lower cost of capital compared to equity. Board of Directors We’re pleased to add Ambassador Susan Rice to our board of directors. Susan is former National

Security Advisor and United States Ambassador to the United Nations. As global company operating in over 190 countries, Susan’s expertise in international affairs will be valuable.

Reference

For quick reference, our eight most recent investor letters are: January 2018. October 2017, Julv 2017. April 2017, Januarv 2017, October 2016. Julv 2016. April 2016.

NlETFLix

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 33 of 67 PageID 75
Earnings Video Interview, 3pm PST

Our video interview with Ben Swinburne of Morgan Stanley will be on youtubelnetflixir at 3pm PST

today. Questions that investors would like to see asked should be sent to beniamin.swinburne@morganstanlev.com. Reed Hastings, CEO, David Wells, CFO, Ted Sarandos, Chief Content Officer, Greg Peters, Chief Product Officer and Spencer Wang, VP of IR/Corporate Development will all be on the video to answer Ben’s questions.

Use of Non-GAAP Measures

This shareholder letter and its attachments include reference to the non-GAAP financial measure of free

cash flow and EBITDA. Management believes that free cash flow and EBITDA are important liquidity metrics because they measure, during given period, the amount of cash generated that is available to

repay debt obligations, make investments and for certain other activities or the amount of cash used in operations, including investments in global streaming content. However, these non—GAAP measures

should be considered in addition to, not as substitute for or superior to, net income, operating income, diluted earnings per share and net cash provided by operating activities, or other financial measures prepared in accordance with GAAP. Reconciliation to the GAAP equivalent of these non-GAAP measures are contained in tabular form on the attached unaudited financial statements.

Forward-Looking Statements

This shareholder letter contains certain forward-looking statements within the meaning of the federal

securities laws, including statements regarding content and marketing spend and strategy, including outside the US; content performance; future capital raises; domestic and international net, total and

paid subscribers; revenue; contribution profit (loss) and contribution margin for both domestic

international operations, as well as consolidated operating income, operating margin; net income, earnings per share and free cash flow. The forward-looking statements in this letter are subject

to risks and uncertainties that could cause actual results and events to differ, including, without limitation: our

ability to attract new members and retain existing members; our ability to compete effectively; maintenance and expansion of device platforms for streaming; fluctuations in consumer usage of our

service; service disruptions; production risks; actions of Internet Service Providers; and, competition,

including consumer adoption of different modes of viewing in-home filmed entertainment. detailed

discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in our filings with the Securities and NETFLIX

IR Contact:

Spencer Wang Vice President, Finance/IR Corporate Development 408 809-5360

PR Contact:

Jonathan Friedland Chief Communications Officer 310 734—2958

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 34 of 67 PageID 76
Exchange Commission, including our Annual Report on Form 10-K, as amended by Form 10-K/A, filed with the Securities and Exchange Commission on February 5, 2018. The Company provides internal

forecast numbers. Investors should anticipate that actual performance will vary from these forecast numbers based on risks and uncertainties discussed above and in our Annual Report on Form 10-K, as amended by Form 10-K/A. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this shareholder letter.

NETFLIX

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Netflix, Inc.

Consolidated Statements of Operations

(unaudited)

(in thousands, except per share data)

Revenues Cost of revenues Marketing Technology and development General and administrative Operating income Other income (expense):

Interest expense

Interest and other income (expense)

Income before income taxes Provision for (benefit from)

income taxes Net income

Earnings per share: Basic Diluted Weighted-average common shares outstanding: Basic Diluted

NETFLIX

Three Months Ended March 31, December 31, March 31, 2018 2017 2017 3,700,856 3,285,755 2,636,635

2,196,075 2,107,354 1,657,024

479,222 419,939 271,270

300,730 273,351 257,108

278,251 239,808 194,291

446,578 245,303 256,942

(81,219) (75,292) (46,742)

(65,743) (38,681) 13,592

299,616 131,330 223,792

9,492 (54,187) 45,570

290,124 185,517 178,222

0.67 0.43 0.41

0.64 0.41 0.40

434,174 433,108 430,600

450,359 448,142 445,458

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 36 of 67 PageID 78
Netflix, Inc.

Consolidated Balance Sheets

(unaudited)

(in thousands)

Assets

Current assets:

Cash and cash equivalents Current content assets, net Other current assets

Total current assets Non-current content assets, net

Property and equipment, net Other non-current assets

Total assets

Liabilities and Stockholders' Equity Current liabilities:

Current content liabilities Accounts payable Accrued expenses Deferred revenue

Total current liabilities Non-current content liabilities

Long-term debt Other non-current liabilities

Total liabilities

Stockholders' equity: Common stock Accumulated other comprehensive income (loss) Retained earnings

Total Stockholders' equity

Total liabilities and Stockholders' equity

NETFLIX

As of March 31, December 31, 2018 2017

2,593,666 2,822,795

4,626,522 4,310,934

597,388 536,245

7,817,576 7,669,974

11,314,803 10,371,055

341,932 319,404

678,486 652,309

20,152,797 19,012,742

4,466,081 4,173,041

436,183 359,555

429,431 315,094

673,892 618,622

6,005,587 5,466,312

3,444,476 3,329,796

6,542,373 6,499,432

139,631 135,246

16,132,067 15,430,786

1,995,225 1,871,396

4,264 (20,557)

2,021,241 1,731,117

4,020,730 3,581,956

20,152,797 19,012,742

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 37 of 67 PageID 79
Netflix, Inc.

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash used in operating activities: Additions to streaming content assets Change in streaming content liabilities Amortization of streaming content assets Amortization of DVD content assets Depreciation and amortization of property, equipment and intangibles Stock-based compensation expense Other non-cash items

Foreign currency remeasurement loss on long-term debt Deferred taxes Changes in operating assets and liabilities: Other current assets Accounts payable Accrued expenses Deferred revenue Other non—current assets and liabilities Net cash used in operating activities Cash flows from investing activities: Acquisition of DVD content assets Purchases of property and equipment Change in other assets Purchases of short-term investments Proceeds from sale of short—term investments Proceeds from maturities of short—term investments Net cash used in investing activities Cash flows from financing activities: Proceeds from issuance of common stock Proceeds from issuance of debt

Issuance costs Other financing activities Net cash provided by financing activities

Effect of exchange rate changes on cash, cash equivalents, and restricted cash Net decrease in cash, cash equivalents, and restricted cash Cash, cash equivalents, and restricted cash at beginning of period Cash, cash equivalents, and restricted cash at end of period

Non-GAAP free cash flow reconciliation: Net cash used in operating activities Acquisition of DVD content assets Purchases of property and equipment Change in other assets Non-GAAP free cash flow

NETFLIX

Three Months Ended March 31, December 31, March 31, 2018 2017 2017

290,124 185,517 178,222

(2,986,747) (2,477,659) (2,348,666) 378,885 53,446 366,257

1,748,844 1,713,863 1,305, 683

11,134 12,289 18,598

19,041 19,073 15,049

68,395 48,530 44,888

8,209 14,126 21,666 41,080 25,740

(22,049) (104,132) (26,764)

(55,905) (87,090) (25,402) 74,083 63,969 (11,000) 119,049 (5,169) 93,542 55,270 83,197 15,221 13,830 (33,657) 8,850

(236,757) (487,957) (343,856)

(10,796) (10,507) (25,372)

(37,170) (21,585) (52,523)

(1,786) (3,749) (769)

(57,774) 55,748

5,100

(49,752) (35,841) (75,590)

56,335 14,705 24,178 1,600,000

(16,828)

(321) 66 61

56,014 1,597,943 24,239

7,177 2,181 5,455

(223,318) 1,076,326 (389,752) 2,822,795 1,746,469 1,467,576 2,599,477 2,322,795 1,077,824

Three Months Ended March 31, December 31, March 31, 2018 2017 2017

(236,757) (487,957) (343,856)

(10,796) (10,507) (25,372)

(37,170) (21,585) (52,523)

(1,786) (3,749) (769)

(286,509) (523,798) (422,520)

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 38 of 67 PageID 80
Netflix, Inc.

Segment Information

(unaudited)

(in thousands)

As of/ Three Months Ended March 31, December 31, March 31, 2018 2017 2017 Domestic Streaming

Total memberships at end of period 56,705 54,750 50,854

Paid memberships at end of period 55,087 52,810 49,375

Revenues 1,820,019 1,630,274 1,470,042 Cost of revenues 894,873 873,372 749,488 Marketing 228,022 195,784 115,038 Contribution profit 697,124 561,118 605,516

International Streaming

Total memberships at end of period 68,290 62,832 47,894

Paid memberships at end of period 63,815 57,834 44,988

Revenues 1,782,086 1,550,329 1,046,199 Cost of revenues 1,258,809 1,191,497 847,317 Marketing 251,200 224,155 156,232 Contribution profit 272,077 134,677 42,650

Domestic DVD

Total memberships at end of period 3,167 3,383 3,944

Paid memberships at end of period 3,138 3,330 3,867

Revenues 98,751 105,152 120,394 Cost of revenues 42,393 42,485 60,219 Contribution profit 56,358 62,667 60,175

Consolidated

Revenues 3,700,856 3,285,755 2,636,635 Cost 0f revenues 2,196,075 2,107,354 1,657,024 Marketing 479,222 419,939 271,270 Contribution profit 1,025,559 758,462 708,341 Other operating expenses 578,981 513,159 451,399 Operating income 446,578 245,303 256,942 Other expense (146,962) (113,973) (33,150) Provision for (benefit from)

income taxes 9,492 (54,187) 45,570 Net income 290,124 185,517 178,222

NETFLIX

1°

Case 3:22-cv-02071-L Document 1-6 Filed 09/16/22 Page 39 of 67 PageID 81
Netflix, Inc. Non-GAAP Information

(unaudited)

(in thousands)

Non-GAAP Adjusted EBITDA reconciliation: GAAP net income Add: Other expense Provision for (benefit from)

income taxes Depreciation and amortization of property, equipment and intangibles Stock-based compensation expense Adjusted EBITDA

NETFLIX

March 31, June 30, September 30, December 31, March 31, 2017 2017 2017 2017 2018

178,222 65,600 129,590 185,517 290,124

33,150 113,845 92,390 113,973 146,962

45,570 (51,638) (13,353) (54,187) 9,492

15,049 18,551 19,238 19,073 19,041

44,888 44,028 44,763 48,530 68,395

316,879 190,386 272,628 312,906 534,014

11

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Exhibit

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HULU SURGES PAST 20 MILLION U.S. SUBSCRIBERS AND ANNOUNCES PLANS TO OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site

May 2,2018 HULU SURGES PAST 20 MILLION U.s. SUBSCRIBERS AND ANNOUNCES PLANS TO OFFER ADVERTISING IN

LIVE TV THIS QUARTER

Acquisitions, Advertising, Business, Content, Distribution, Movies, Originals, Product, Technology, Uncategorized

HULU SURGES PAST 20 MILLION U.S. SUBSCRIBERS

https://WWW hulu.com/press/hulu—surges-past—20-million—u-s-subscribers-and-announces-plans-to-offer-advertising-in-live-tV-this-quaIter/[7/17/2018 1:46:23 PM]

Hulu

Updates

Tech

Blog

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HULU SURGEs PAST 20 MILLION U.s. SUBSCRIBERS AND ANNOUNCES PLANS To OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site AND ANNOUNCES PLANS TO OFFER ADVERTISING IN LIVE TV THIS QUARTER

Premium Streaming Service Reports 60 Percent Jump In Engagement and

Reveals 78 Percent 0f Viewing 0n Hula Takes Place In he Living Room

Company Expands Originals Slate with Series Orders for Four Weddings and Funeralfrom Mindy

Kaling and New Comedy Seriesfrom Ramy oussef

Jerrod Carmichael and A24

Hulu and Blumhouse Television Unveil Year-Round Horror Event Series: Into the Dark

Emmy and Golden Globe Award- Winning Series, The Handmaid’s Tale,

Renewedfor Season Three

#1 New Broadcast Drama, The Good Doctor, to Stream Exclusively on Hulu in New Deal with Sony

Pictures Television

Company Announces Its irst—ever Agreement with Dream Works Animation in Hulu ’s Largest Kids

and Family Licensing Deal to Date

Hulu to Launch Ad—Supported Downloadable Content During 2018-19 Upfront Season

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HULU SURGES PAST 20 MILLION U.S. SUBSCRIBERS AND ANNOUNCES PLANS TO OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site MAY 2, 2018 [NEW YORK, NY] Today, during the Hulu 18 Presentation at the newly-named Hulu

Theater at Madison Square Garden, executives took the stage to reveal the company’s rapid growth,

announce multiple original programming and exclusive acquisition deals that expand Hulu’s content

offering, and unveil new product and measurement innovations that will bring the future of television

to the advertising business.

Reinforcing Hulu’s position as one of the world’s top 10 direct-to-consumer entertainment brands,

the company announced that it has surpassed 20 million U.S. subscribers and has grown total

engagement on Hulu by more than 60%. In addition, Hulu revealed that 78% of viewing on the

service takes place in the living room, on connected TVs.

“Hulu is the complete TV experience for consumers, offering both live and on-demand programming

and more consumer choice than ever before,” said Freer. “We are the only place that delivers award- winning content, ad loads less than half that of traditional television, with ads that are always

viewable and always

in brand-safe environment and we are leading the TV and advertising

industries into the future.”

Announcements at this year’s presentation include:

New Series our Weddings and Funeral and Ramy Join Catch-22, The First, Castle Rock and Little

Fires Everywhere as Hulu Originals

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HULU SURGES PAST 20 MILLION U.s. SUBSCRIBERS AND ANNOUNCES PLANS T0 OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site Hulu has expanded its Slate of critically-acclaimed original series with new series orders for our Weddings and Funeral and Ramy, which join upcoming Hulu Originals Castle Rock, Hulu’s second

project

from .J Abrams and Stephen King set to premiere on July 25; Catch-22, from George

Clooney and starring Kyle Chandler; he First, from Beau Willimon and starring Sean Penn; and

Little Fires Everywhere, from Reese Witherspoon and Kerry Washington, based on the acclaimed

novel of the same name.

Today, the company confirmed an order for Four Weddings and Funeral, limited series written

and executive produced by Mindy Kaling and Matt Warburton, inspired by the 1994 British romantic

comedy film. The series will follow group of friends as their lives intersect through five events.

Kaling and Warburton who teamed up together

for The Mindy Project will executive produce

alongside Jonathan Prince, Howard Klein (3 Arts), Tim Bevan and Eric Fellner (Working Title).

The series comes to Hulu from MGM Television and Universal Television, with MGM serving as the

lead studio, and marks Mindy Kaling’s second original series with Hulu following he Mindy

Project. The project marks the second project with MGM Television following The Handmaid’s Tale

and its third project with Universal Television following The Path and The Mindy Project.

Hulu has also given series order to Ramy, groundbreaking comedy series based on the real-life

experiences and comedy of Ramy Youssef. The series takes viewers into the world of Ramy, first

generation American Muslim who is on spiritual journey in his politically-divided New Jersey

neighborhood. Ramy will bring new perspective to the screen as it explores

the challenges of what

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HULU SURGES PAST 20 MILLION U.s. SUBSCRIBERS AND ANNOUNCES PLANS T0 OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site

it’s like being caughtin between an Egyptian community that thinks life is moral test, and millennial generation that thinks life has no consequences.

Ramy is written, executive produced, created by and starring Ramy Youssef, and executive produced

by Jerrod Carmichael, co-creators Ari Katcher and Ryan Welch as well as A24’s Ravi Nandan. The

series marks the first original series order for Hulu from A24, an award winning New York-based media company focused on the distribution, financing, development and production of television and

feature film projects.

Hulu and Blumhouse Television Reveal Into he Dark Year-Round Horror Event Series

In partnership with Blumhouse Television, Hulu unveiled Into he Dark, brand new horror event

series from prolific, award-winning producer, Jason Blum’s independent TV studio. The series will

include 12 standalone super-sized episodes, with new installment released on the first Friday of

every month throughout

the year. Each episode is inspired by holiday from the month of it release,

but all will feature Blumhouse’s signature genre/thriller spin on the story. Blumhouse Television,

drawing on its deep talent relationships, is working with broad section of filmmakers, creators and

actors to bring this unique, first-of-its-kind series to Hulu audiences.

The first story, he Body, premieres on Friday, October 5. Set in the selfie culture of Los Angeles on Halloween night, The Body follows sophisticated, overconfident hitman who always carries out his work in style. He decides to take things even further one day by transporting his latest victim in plain

sight, correctly assuming that self-absorbed LA partiers will simply be enamored with his elaborate

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HULU SURGES PAST 20 MILLION U.S. SUBSCRIBERS AND ANNOUNCES PLANS TO OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site

“costume.” Eventually, as his window of opportunity to dispose of the body beginsto close, Wilkes’

true colors reveal themselves to some groupiesthat have latched on to him. It becomes battle of will

and wits.

Based on short film of the same name, he Body will be directed by Paul Davis and will star Tom

Bateman (Murder 0n the Orient Express, Vanity air) as Wilkes, the suave, professional hitman, and

Rebecca Rittenhouse (The Mindy Project, Blood Oil) as Maggie, feisty, whip-smart, woman who

becomes captivated by Wilkes the more she learns of his real profession. Aurora Perrineau

(Blumhouse’s Truth or Dare) plays Dorothy, who uses her cynicism and resourcefulness to try to

outwit Wilkes. She is joined by David Hull (Crazy Ex-Girlfriend, Insecure) as Allan, and Ray

Santiago (Ash vs Evil Dead, Meet the ockers, In Time) as Jack both are Hollywood and Internet wannabes whose cluelessness complicates

the evening time and again. The script was co-written by

Paul Fisher, who will also serve as producer on the project, and Davis. Alexa Faigen (Safe House,

Love Happens)is executive producing for Blumhouse.

Into the Dark’s second installment, to be released on Friday, November 2, will be Flesh Blood,

directed by Patrick Lussier (My Bloody Valentine, Dracula 2000). Dermot Mulroney (August: Osage

County, Shameless, The Wedding Date) stars as Henry, doting father trying to help his daughter,

Kimberly, teenager suffering from agoraphobia, who has not left the house since her mother’s stillunsolved murder. Kimberly is played by newcomer Diana Silvers, and Tembi Locke (Dumb and Dumber o, Eureka) plays her therapist. Set on the eve of Thanksgiving year after her mother’s

death, Kimberly begins

to suspectthat she is in danger

in the home, but she can’t leave and doesn’t

know who she can trust.

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HULU SURGES PAST 20 MILLION U.S. SUBSCRIBERS AND ANNOUNCES PLANS TO OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site

he Handmaid’s Tale Renewed for Season Three

Following its record-breaking season two premiere last week which has already doubled its

audience versus season one Hulu has renewed the Emmy and Golden Globe Award-winning series

he Handmaid’s Tale for third season.

Since its premiere in April 2017, he Handmaid ’s Tale has gone on to become the first series ever on

streaming Video on-demand service to take both the Golden Globe and Emmy Award for Best Drama Series. The Handmaid ’s Tale is an eight-time Emmy Award-winning drama series and has

garnered more than 30 prestigious awards to date, including 2018 Peabody Award.

Based on the award-winning, best-selling novel of the same name by Margaret Atwood, The Handmaid’s Tale became the most-viewed series debut on Hulu ever in its first week and has drawn

acclaim from both fans and critics since its series premiere. Starring Elisabeth Moss, Joseph Fiennes,

Yvonne Strahovski, Alexis Bledel, Madeline Brewer, Ann Dowd, O-T agbenle, Max Minghella,

Samira Wiley, and Amanda Brugel, the series is created for television by Bruce Miller, who serves as

the series’ showrunner. The Handmaid’s Tale is executive produced by Miller, Warren Littlefield, Daniel Wilson, Fran Sears, Ilene Chaiken and Elisabeth Moss. Margaret Atwood serves as coexecutive producer

for season three of the series.

Hulu Continues Adding the Best of TV With Exclusive SVOD Deal For Broadcast’s No. New

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HULU SURGES PAST 20 MILLION U.s. SUBSCRIBERS AND ANNOUNCES PLANS T0 OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site Drama, he Good Doctor

Under new agreement with Sony Pictures Television, Hulu is now the exclusive SVOD streaming

home to ABC’s hit drama series he Good Doctor. The complete first season of the series is now

available on Hulu, and future episodes will become available the day after their original broadcast on ABC. Following last year’s acquisition ofNBC’S This Is Us, this marks the second consecutive year Hulu has secured exclusive SVOD rights

to broadcast’s #1 new drama.

he GoodDoctor which just wrapped up its first season was recently renewed for second

season following breakout premiere. The series has become ABC’s most watched freshman series

in l3 years and delivered triple-digit year-over—year

time period increases to Monday’s 10 o’clock

hour for ABC in Total Viewers (+172%) and Adults 18-49 (+162%).

The series stars Freddie Highmore, Antonia Thomas, Nicholas Gonzalez, Chuku Modu, Beau Garrett, Hill Harper, Richard Schiff and Tamlyn Tomita. The series is from Sony Pictures Television and ABC Studios. David Shore is writer and executive producer. Daniel Dae Kim, David Kim, Seth Gordon and Sebastian Lee are also executive producers.

The Good Doctorjoins growing list of hit ABC series now streaming exclusively on Hulu in

SVOD, including Sony Pictures Television’s The Goldbergs.

Hulu Strikes Its Largest Kids Family Licensing Deal to Date in First-Ever Agreement with

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HULU SURGES PAST 20 MILLION U.S. SUBSCRIBERS AND ANNOUNCES PLANS TO OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site DreamWorks Animation

Hulu today announced its first-ever multi-year deal with DreamWorks Animation, making Hulu the

exclusive streaming home to future slates of DreamWorks Animation feature films, as well as iconic DreamWorks library films. In addition, Hulu will work with DreamWorks Animation Television to

develop original kids family series for exclusive streaming based on the company’s popular

franchises and upcoming feature films. This marks the first time Hulu has partnered with major

studio in multi-series commitment to debut original kids family content.

Through the deal, Hulu will become the exclusive U.S. streaming home to future theatrical releases

from the studio beginning in 2019, including upcoming franchise films How to Train Your Dragon:

he Hidden World, he Boss Baby and Trolls 2, in the pay one window. It will also expand Hulu’s

film offering in the coming years with catalog of popular library films from the studio including

Shrek, Shrek and Shark Tale, the first time DreamWorks Animation titles will become available to

stream on Hulu.

As part of Hulu’s commitment to expanding its library with family programming, the deal also makes Hulu the home to slate of new, original series inspired by characters from DreamWorks’ hit

franchises and upcoming feature films. DreamWorks Animation Television will develop and

produce the series, which will debut on Hulu beginning in 2020.

Hulu To Introduce Advertising in Live TV

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HULU SURGES PAST 20 MILLION U.s. SUBSCRIBERS AND ANNOUNCES PLANS T0 OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site Beginning later this quarter, Hulu will begin offering dynamically inserted advertising within its Hulu With Live TV product. This will allow brands to reach Hulu’s young and engaged audience in its live

sports, news and entertainment programming. This capability will be introduced across select cable

networks and roll out onto additional live content over the coming months.

Hulu to Launch the Industry’s First Ad-Supported Downloadable Content Experience

Today, Hulu announced its plans

to become the first company to offer downloadable content

experience with opportunities for advertisers. The new feature will make it possible for subscribers to

access their favorite shows and movies on the go, with no internet connection required, and will give

advertisers the opportunity to reach their target audiences in viewing experience never before

available to advertisers.

“Our launch of the industry’s first ad-supported downloadable content experience is yet another

example of how Hulu is innovating viewer-first ad solutions to drive powerful results for brands” said

Peter Naylor, SVP of Advertising Sales at Hulu. “With downloadable content, we’re offering brands more ways to connect with engaged viewers who love the experience of watching television, wherever they may be.”

The experience will launch on Hulu during the 2018-19 upfront season.

Hulu Establishes Digital Ad Ratings as the New Currency for Advertisers

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Today, Hulu revealed that Nielsen Digital Ad Ratings (DAR)

for OTT is now its currency of business

across the platform. Advertisers can use DAR to measure, guarantee and report campaign audience

delivery across all desktop, mobile and connected devices, providing vitalinsight

into viewership on

the platform. With 78% of Hulu viewing taking place in the living room, DAR provides accurate,

holistic measurement for everyone watching.

Hulu Doubles Down on Driving Business Outcomes, Expands Suite of Sales Effectiveness Tools

As part of Hulu’s efforts to offer advertisers more ways to prove business outcomes, Hulu announced

it has expanded its suite of sales effectiveness tools with four new partnerships.

Hulu will now offer attribution across the auto and retail categories working with IHS Markit for

Polk Campaign Measurement Solutions and Nielsen Buyer Insights, respectively. In addition, Hulu

announced an expanded offering for CPG brands with the help ofIRI’s attribution solution.

And in partnership with Experian, Hulu will offer advertisers the ability to enhance their CRM data with Hulu’s first-party data to deliver better insight

into sales growth on the platform.

About Hulu

Hulu is leading premium streaming service that offers instant access to live and on demand

https://www hulu.com/press/hulu—surges-past—20-million-u-s-subscribers-and-announces-plans-to-offer-advertising-in-live-tv-this-qua11er/[7/1 7/20 1:46:23 PM]

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HULU SURGES PAST 20 MILLION U.s. SUBSCRIBERS AND ANNOUNCES PLANS T0 OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site

channels, original series and films, and premium library of TV and movies to more than 20 million

subscribers in the U.S. Since its launch in 2008, Hulu has consistently been at the forefront of

entertainment and technology. Hulu is the only streaming service that offers both ad-supported and

commercial-free current season shows from the largest U.S. broadcast networks;libraries of hit TV

series and films; and acclaimed Hulu Originals including Emmy® and Golden Globe Award-winning

series he Handmaid ’s Tale, he Looming Tower, Future Man, Marvel ’s Runaways, he Path,

11.22. 63, and Golden Globe nominated comedy Casual, as well as upcoming series Castle Rock, The

First, Catch-22 and Little Fires Everywhere. In 2017, Hulu added live news, entertainment and sports

from st Century Fox, The Walt Disney Company, NBCUniversal, CBS Corporation, The CW,

Turner Networks, A+E Networks and Scripps Networks Interactive to its offerings making it the

only TV service that brings together live, on-demand, originals, and library content all in one place,

across living room and mobile devices.

https://www hulu.com/press/hulu—surges-past—20-million-u-s-subscribers—and-announces-plans-to-offer-advertising-in-live-tv-this-quarter/[7/1 7/201 1:46:23 PM]

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HULU SURGES PAST 20 MILLION U.S. SUBSCRIBERS AND ANNOUNCES PLANS TO OFFER ADVERTISING IN LIVE TV THIS QUARTER Hulu Press Site

LATEST PRESS RELEASES

July 16, 2018 July 12, 2018

IT’S OFFICIAL: UnREAL HULU LANDS RECORD 27 MOVES TO HULU FOR ITS PRIMETIME EMMY® AWARD

FINAL SEASON NOMINATIONS

ACQUISITIONS, CONTENT, ORIGINALS ACQUISITIONS, BUSINESS, CONTENT, MOVIES,

ORIGINALS

Follow @Hulu

HULU ADVERTISING

About Us Ad Experience Executives Brand Solutions

Subscribe Now Hulu Originals

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JOBS

Positions Hulugan Life What Defines Hulu

Employee Verification

FOLLOW US

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PRESS Originals News

Schedule

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About Ads Hulu.c01n Tenns

Privacy Policy 2017 Hulu

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Exhibit

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Disney+ Paid Subscriber Count SuIpasses 50 Million Milestone The Walt Disney Company

APRIL 8,2020 Disney+ Paid Subscriber Count Surpasses 5O Million Milestone

LAUNCHED FIVE MONTHS AGO, THE SERVICE IS NOW

AVAILABLE IN MORE THAN DOZEN COUNTRIES AROUND

THE WORLD

BURBANK, CA (April 8, 2020) Continuing to delight consumers

around the world, Disney+ has now achieved another new milestone, with 5O million paid subscribers globally within five months after its U.S. launch.

“We’re truly humbled that Disney+ is resonating with millions around

the globe, and believe this bodes well for our continued expansion

throughout WeStern Europe and into Japan and all of Latin America

later this year,” said Kevin Mayer, Chairman of Walt Disney Direct-to- Consumer International. “Great storytelling inspires and uplifts, and we are in the fortunate position of being able to deliver vast array of

great entertainment rooted in joy and optimism on Disney+.”

In the paSt two weeks, Disney+ rolled out in eight Western European

countries including the UK, Ireland, France, Germany, Italy, Spain, Austria, and Switzerland. Additionally, Disney+ became available last

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Disney+ Paid Subscriber Count SuIpasses 50 Million Milestone The Walt Disney Company week in India, where it is offered in conjunction with the existing Hotétar service, and already accounts for approximately eight million of Disney+’s 50 million paid subscribers.

ABOUT DISNEY+

Disney+ is the dedicated streaming home for movies and shows from

Disney, Pixar, Marvel, Star Wars, National Geographic, and more. As

part of Disney’s Direct-to-Consumer and International (DTCI)

segment, Disney+ is available on most internet—connected devices

and offers commercial-free programming with variety of original

feature-length films, documentaries, live-action and animated series

and short-form content. Alongside unprecedented access to Disney’s

incredible library of film and television entertainment, the service is also the exclusive streaming home for the lateSt releases from The Walt Disney Studios. Visit DisneyPlus.com to subscribe and/or learn more about the service.

FonNard-Looking Statements

Certain Statements and information in this communication may be deemed to be “fonNard-looking Statements” within the meaning of the

Federal Private Securities Litigation Reform Act of 1995, including Statements such as the expected performance of our goods and

services, anticipated availability or timing of our goods or services

and other Statements that are not Statements of hiStorical fact. These

Statements are often characterized by terminology such as “will,”

“believe” and similar expressions. These Statements are made based on views and assumptions as of the time made and the Company does not undertake any obligation to update these

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Disney+ Paid Subscriber Count SuIpasses 50 Million Milestone The Walt Disney Company

Statements.

Actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company,

including Strategic or restructuring initiatives (including capital

investments, asset acquisitions or dispositions) or other business decisions (including regarding direct-to-consumer launch timing, platform or content), as well as from developments beyond the Company’s control, including:

changes in domestic and global economic conditions, competitive

conditions and consumer preferences; adverse weather conditions or natural disasters; health concerns;

international, regulatory, political, or military developments

(including government requests to delay direct-to-consumer launch

in certain jurisdictions);

technological developments; and

labor markets and activities;

each such risk includes the impacts of COVlD-19 and related mitigation efforts.

Such developments may further affect entertainment, travel and

leisure businesses generally and may, among other things, further

affect:

the performance of the Company’s theatrical and home entertainment releases;

the advertising market for broadcast and cable television

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Disney+ Paid Subscriber Count SuIpasses 50 Million Milestone The Walt Disney Company

programming; demand for our products and services;

construction; expenses of providing medical and pension benefits;

income tax expense; performance of some or all company businesses either directly or

through their impact on those who distribute our products; and

achievement of anticipated benefits of the TFCF transaction.

Additional factors are set forth in the Company’s Annual Report on

Form 10-K for the year ended September 28, 2019 under Item 1A,

“Risk Factors,” Item 7, “Management’s Discussion and Analysis” under Item 1A, “Risk Factors,” Item 7, “Management’s Discussion

and Analysis,”Item 1, “Business,” and subsequent reports, including,

among others, Quarterly Reports on Form 10-Q and Current Reports on Forms 8-K._

Media Contacts:

Zenia Mucha 818-560-5300

Zenia.MucI‘.a@disney.com

Karen Hobson

818-560-4057

Karen.Hobson@disney.com

READ MORE ABOUT

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PRESS RELEASES

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Disney+ Paid Subscriber Count Surpasses 50 Million Milestone The Walt Disney Company

Terms of Use Privacy Policy Your California Privacy Rights Children’s Online Privacy Policy Disneycom Guest Services Advertise With Us Interest-Based Ads Do Not Sell My Personal Information Contact Us

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Exhibit

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How does Netflix work? Page of

NETFLIX Member Sign In

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(https://www.netflix.com/) Start Your Free Month Help Center (/en) IacmmeéfieggéemfisgwAt’AzFt’A How does Wetfflskf'WHPK?e“°/°2F“°de%

2F412)

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How does Netflix work? Page of

Netflix membership is month-to-month subscription that begins on the date you sign up. No

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How does Netflix work? Page of

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In over 190 countries (https://he|p.netflix.com/en/node/14164), Netflix members get

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How does Netflix work? Page of

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the System Requirements (https://help.netflix.com/en/node/23742) for web browser

compatibility.

The Netflix app may come pre-loaded on certain devices, or users may need to download the Netflix app onto their device. Netflix app functionality may differ between devices. See our Terms of Use for limitations and usage. Need help getting set up? Search our Help Center (https://help.netflix.com/) for the manufacturer of the device you're using.

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How does Netflix work? Page of

3. Enter payment method so you don’t miss single episode when yourfree trial ends.

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You can cancel your free trial at any time during your first 30 days and never be charged.

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As member of Netflix, you'll be billed once month (https://he|p.netflix.com/en/node/27) on

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option to cancel online (https://he|p.netflix.com/en/node/407), anytime.

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