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Aereo, Broadcasters to Face Off in Supreme Court

15 Jan, 2014 By: Doug McPherson

WASHINGTON – The U.S. Supreme Court has agreed to hear broadcasters’ appeal in their fight to stop Aereo, the company that sells live TV programming over the Internet.

Walt Disney Co.’s ABC, 21st Century Fox, Comcast Corp.’s NBC Universal and CBS Corp. say Aereo, which is backed by Barry Diller, is violating their copyrights by using antennas to obtain broadcast signals without paying fees.

The fight focuses on the part of the federal copyright law that gives owners the exclusive right to perform their works “publicly.” Appeals courts have called Aereo’s service legal because the separate antennas let each customer create a distinct copy of a broadcast program for viewing, so no public transmission takes place.

The broadcasters argued in their appeal that Aereo is trying to use a “technical detail” to circumvent well-established legal rights. “There is no dispute that Aereo has developed a business model around the massive, for-profit exploitation of the copyrighted works of others,” the broadcasters argued.

Broadcasters say a federal appeals ruling favoring Aereo might let cable and satellite providers avoid paying “retransmission” fees to carry programming. With those fees estimated to exceed $4 billion in 2014, some broadcast companies say they may convert to cable channels if Aereo isn’t shut down.

The lower court decision brought to the Supreme Court by broadcasters “is already transforming the industry and threatening the very fundamentals of broadcast television,” according to the appeal.

“We believe that Aereo’s business model, and similar offerings that operate on the same principle, are built on stealing the creative content of others,” CBS said in a statement. “We are pleased that our case will be heard and we look forward to having our day in court.”

Aereo is also good with the court’s attention and had joined the broadcasters in urging Supreme Court review, saying the company needs legal clarity so it can pursue growth. In separate cases, two federal trial judges ruled that another company’s similar system was a copyright violation.

“We said from the beginning that it was our hope that this case would be decided on the merits and not through a wasteful war of attrition,” Aereo said in a statement. “We look forward to presenting our case to the Supreme Court and we have every confidence that the Court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna, make a personal recording with a DVR, and watch that recording on a device of their choice.”

Diller, who helped create the Fox network, says Aereo may eventually get as much as 35 percent of U.S. households to subscribe if it overcomes legal challenges. The service charges customers $8 a month.

Despite all the litigation, Aereo is still attracting investors and reports it received an infusion of $34 million last week – money it will use to open in 15 new markets.

DirecTV, Time Warner Cable and Charter Communications are all considering using the same approach – capturing free broadcast-TV signals to avoid paying retransmission fees – according to people with knowledge of the companies’ plans.

A Supreme Court ruling favoring Aereo also would affect local broadcasters, which negotiate their own deals with pay-TV operators. A victory for Aereo could undermine the value of billions of dollars in acquisitions.

The Supreme Court is expected to hear arguments in April and rule by early July.

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