Aereo Loses: Supreme Court Sides With Broadcasters in Streaming TV Case

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By Jason Abbruzzese2014-06-25 14:16:48 UTC

Aereo, the startup that threatened to upend traditional television broadcasting by capturing over-the-air TV signals and streaming them on the Internet, has been dealt a crushing defeat by the Supreme Court after justices find 6 to 3 that the online television service violated copyrights by streaming broadcast channels to customers.

The decision is a victory for broadcasters that have battled Aereo in court for two years. The ability for Aereo to circumvent the retransmission fee system, in which cable operators pay to rebroadcast free-to-air television, had threatened a major revenue source for broadcasters.

The ruling could be a death blow to Aereo, as founder Chet Kanojia has said the company had prepared no "Plan B" in case of defeat and Barry Diller, whose IAC backs Aereo, has admitted the company would be "finished." Those claims have been countered by some analysts who say that the company could become licensed as a cable operator, gain the necessary licensing and negotiate with broadcasters.

The Supreme Court decision reverses rulings from a federal court and a second circuit court of appeals that found Aereo did not violate copyright protections. Aereo had suffered some legal setbacks including a judge that ordered Aereo to halt service in Utah.

Paul Clement, attorney for the broadcasters, said in a statement: “Today’s decision is a victory for consumers. The Court has sent a clear message that it will uphold the letter and spirit of the law just as Congress intended.”

Aereo claimed that is merely offers a service to customers, who are charged a monthly fee to lease a small antenna linked to a cloud DVR service, so that they can access free broadcast TV. Broadcasters claimed that what Aereo is doing amounts to retransmission, which would violate copyrights.

Aereo launched in 2012 with backing from media mogul Barry Diller's IAC. The service provides users with the ability to stream television from local broadcast affiliates over the Internet and record shows.

The Supreme Court case originated from a lawsuit filed by broadcasters before Aereo launched in New York City, the largest television market in the U.S. Aereo has continued to expand and is now available in 11 cities with plans to expand to many more.

Broadcasters have threatened a variety of repercussions if Aereo was allowed to continue operating. Fox said it would look into becoming a cable channel; Les Moonves, CEO of CBS, said his company would look into its own streaming offering.

Even with Aereo's defeat, broadcasters can be expected to move to embrace Internet television. ABC launched a new Apple TV app on Tuesday that delivers 24-hour news content. Comcast, which owns NBC, is already rolling out options like a streaming set-top box and a Netflix competitor.

The much-heralded move to cord cutting asks serious questions about existing television business models, but the defeat of Aereo should decelerate an already slow shift. Cable customers declined for the first time in 2013 and are projected to contract at a pace that will ensure years of cable subscription revenue.

AMERICAN BROADCASTING COS., INC., ET AL. v. AEREO, INC., FKA BAMBOOM LABS, INC.

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Topics: Aereo, Business, Media, Supreme Court