Aereo challenges one of the most basic tenets of the television
business. Broadcasters have been trying to sue it out of existence for a
year. But after suffering a big setback Monday, the broadcast world may
have to learn to live with it.
A federal appeals court in New York on
Monday upheld a ruling in favor of Aereo, the startup Internet service
that streams stations without compensating them. The decision set the
stage for a full-blown trial.
The broadcasters, surprised and
disappointed, said they were confident they would prevail eventually.
But as the legal battles continue, Aereo, for now available only in New
York City, plans to offer its service in nearly two dozen more cities
The service's triumphant backer, the media mogul Barry
Diller, said of the ruling: "We always thought our Aereo platform was
permissible and I'm glad the court has denied the injunction. Now we'll
build out the rest of the U.S."
Aereo is able to stream broadcast
stations by operating an array of tiny antennas that pick up
over-the-air signals. Subscribers paying about $8 a month receive
control over one antenna and can select programming over the Internet.
essentially turns the subscriber's phone, computer or tablet into a
small television set, but without the rabbit ears that would normally be
The array of antennas in Brooklyn allows Aereo to avoid
paying the retransmission fees that operators like Time Warner Cable and
DirecTV pay for access to stations. Those fees are an increasingly
important revenue source for the stations, so it is not surprising their
owners have sued to protect them.
The broadcasters, including CBS
Corp., Comcast, News Corp. and the Walt Disney Co., filed two suits
against Aereo more than a year ago, weeks before the service was made
available in New York. But a district court judge denied the request for
a preliminary injunction last summer.
The 2nd U.S. Circuit Court
of Appeals affirmed the lower court ruling on Monday in a 2-1 decision,
saying that Aereo's streams of TV shows to individual subscribers did
not constitute "public performances," and thus the broadcasters'
copyright infringement lawsuits against the service "are not likely to
prevail on the merits."
Aereo also includes a digital video
recorder not unlike the remote digital video recorder system that was
operated by Cablevision and was upheld in court several years ago. Judge
Christopher F. Droney pointed to that decision as he affirmed the
previous court ruling in favor of Aereo.
Another appeals court
judge, Denny Chin, dissented Monday, calling Aereo's antenna system "a
Rube Goldberg-like contrivance, overengineered in an attempt to avoid
the reach of the Copyright Act and to take advantage of a perceived
loophole in the law." He concluded that Aereo's streams to subscribers
were "public performances" and thus violations of copyright.
But the majority opinion gave momentum to Aereo, which announced a plan to expand to 22 more cities in January.
aren't the only ones affected by the technology. While it doesn't have
many subscribers now, Aereo gives television viewers a new and
relatively cheap way to subscribe to a limited diet of TV and gives
advertisers yet another way to reach those viewers.
in court may make other companies more comfortable in joining forces
with the service; prospective partners include cable channels that want
carriage (Bloomberg TV signed the first such deal with Aereo last year)
and wireless providers. And the mere existence of the service may cause
the broadcasters to speed up their own plans for streaming programming
to phones and tablets.
After the ruling Monday, analysts suggested
that some cable and satellite providers - those that pay billions of
dollars in retransmission fees for the right to carry broadcasters'
signals - might start to mimic Aereo's system to get around the fee
requirements, or at least improve their position at the bargaining
table. Others predicted that the broadcasters might lobby Congress to
change the law.
Undeterred, a group of the plaintiffs, including Fox and PBS, said they intended to move to trial.
decision is a loss for the entire creative community," they said in a
statement. "The court has ruled that it is OK to steal copyrighted
material and retransmit it without compensation. While we are
disappointed with this decision, we have and are considering our options
to protect our programming."
The broadcasters say they are
heartened by a victory in December in U.S. District Court in Los Angeles
against an Aereo-like service named Aereokiller, backed by the
billionaire Alkiviades David.
CBS alluded to that ruling when it
said in a statement Monday, "As the courts continue to consider this
case and others like it, we are confident that the rights of content
owners will be recognized, and that we will prevail."
© 2013, The New York Times News Service