BackAereo survival imperiled as court rules copyrights violated
Aereo was threatening the underpinnings of the industry by selling programming online without paying licensing fees, say broadcast firms
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Washington: The US Supreme Court dealt what is likely to be a fatal blow to Aereo Inc and its dream of transforming the television industry, ruling that the Barry Diller-backed Internet startup is violating broadcasters’ copyrights.
The 6-3 ruling is a triumph for broadcast companies, including Walt Disney Co.’s ABC, 21st Century Fox Inc, Comcast Corp.’s NBCUniversal and CBS Corp. They said Aereo was threatening the underpinnings of the industry by selling programming online without paying licensing fees.
Aereo sought to give consumers a new way to watch broadcast TV without buying the packages offered by cable and satellite companies. Customers in 11 cities have been able to watch live and recorded broadcast programmes for as little as $8 a month.
Shares of IAC/InterActiveCorp., of which Diller is chairman, fell as much as 2.7% to $67.42 after the ruling, the most since May. CBS’s stock climbed as high as 8.3% to $63.75, the most since January, while Fox rose 1.1% to $34.59 at 11:30 am in New York.
It’s not a big (financial) loss for us, but I do believe blocking this technology is a big loss for consumers, Diller said in an e-mailed statement.
CBS said in a statement, We are pleased with Wednesday’s decision, which is great news for content creators and their audiences.
Football, baseball
The ruling is also a win for the National Football League and Major League Baseball, which said Aereo is exploiting their copyrighted telecasts. The NFL told the court that Aereo’s legal arguments would let the company provide distant signals as well as local ones, so customers could watch games from around the country without compensating the league.
Broadcasters said Aereo threatened to create a blueprint that would let cable and satellite providers stop paying billions of dollars in retransmission fees each year to carry local programming. With those fees estimated to exceed $4 billion this year, some broadcasters said they might convert to cable channels if Aereo weren’t shut down.
Justice Stephen Breyer wrote the court’s majority opinion. Justices Antonin Scalia, Clarence Thomas and Samuel Alito dissented.
The court fight centered on a provision in the federal copyright law that gives owners the exclusive right to perform their works publicly. Breyer said Aereo violated that provision, operating much like a cable TV provider.
Equipment provider
Aereo is not simply an equipment provider, Breyer wrote. Aereo sells a service that allows subscribers to watch television programmes, many of which are copyrighted, almost as they are being broadcast.
Scalia said Aereo didn’t violate the public performance provision because it let subscribers choose which programs they were receiving. He said the justices should have sent the case back to a lower court to let the broadcasters press other copyright arguments. If necessary, he said, the broadcasters could have taken their concerns to Congress.
I share the court’s evident feeling that what Aereo is doing (or enabling to be done) to the networks’ copyrighted programming ought not to be allowed, Scalia wrote. But perhaps we need not distort the Copyright Act to forbid it.
‘Very unfortunate’
The ruling is very unfortunate for consumers, Bartees Cox, a spokesman for the Washington-based policy group Public Knowledge, which urged the court to let Aereo operate, said in an e-mail. Aereo is a true innovator in the TV industry and provides high-quality and affordable programming for its customers.
Aereo contended that a ruling against the company would endanger cloud computing, the business of storing videos and other content for customers on remote servers. The majority on Wednesday said the ruling was a limited one that wouldn’t affect cloud computing.
We cannot now answer more precisely how US copyright law will apply to technologies not before us, Breyer wrote. He noted that cloud-based storage services offer people a way to play material they already received lawfully.
Aereo said it facilitates thousands of one-to-one transmissions from an antenna to a customer’s screen. The company said its system is legally indistinguishable from the antennas homeowners have placed on their own roofs for decades.
Technical detail
The broadcasters said Aereo was trying to use a technical detail to circumvent well-established legal rights. The Obama administration backed the broadcasters.
In a statement, 21st Century Fox said the decision affirms important copyright protections and ensures that real innovation in over-the-top video will continue to support what is already a vibrant and growing television landscape.
Aereo also distributes Bloomberg TV to subscribers. Bloomberg LP is the parent company of Bloomberg News and Bloomberg Television.
The decision is a victory for local broadcasters, which negotiate their own deals with pay-TV providers. A ruling favoring Aereo might have undermined the value of billions of dollars in acquisitions. BLOOMBERG
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