Comcast, others angry over Aereo ruling

Chet Kanojia , CEO of Aereo Inc. The technology could appear in Philadelphia by summer. BEBETO MATTHEWS / AP
Chet Kanojia , CEO of Aereo Inc. The technology could appear in Philadelphia by summer. BEBETO MATTHEWS / AP
Posted: April 03, 2013

Aereo Inc., the Barry Diller-backed technology venture that streams broadcast TV content online, won an important court challenge Monday brought by NBC and a dozen other broadcasters or studio-production companies.

The plaintiffs say the Aereo service violates copyright law and steals their content for profit.

But the U.S. Court of Appeals in New York, in a 2-1 decision, said the plaintiffs were not likely to win on the merits of their case and denied a preliminary injunction against the Aereo service.

The decision enables Aereo, now available only in New York, to expand to other TV markets, and it has said it could launch in Philadelphia this summer.

Comcast-owned NBC Studios, NBCUniversal Media, and the Spanish-language Telemundo Network Group are among the companies suing Aereo. Broadcasters said Monday they were disappointed in the court's decision and were considering legal options now that the case is headed for trial.

Aereo chief executive officer Chet Kanojia said the court decision "validates that Aereo's technology falls squarely within the law, and that's a great thing for consumers who want more choice and flexibility in how, when, and where they watch television."

Aereo could be a threat to pay-TV companies such as Comcast Corp. by peeling away subscribers for a new service that costs about $10 a month. Aereo also has the potential of depriving NBC, ABC, Fox, CBS, and local TV stations of retransmission fees from pay-TV companies if subscribers move to it.

The dissenting judge, Denny Chin, called Aereo's technology platform a "sham" and 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."

Aereo captures broadcast-TV signals on individual dime-size antennas on an antenna farm, stores the programming for a few seconds, and then streams a copy of the content to subscribers on laptops, smart phones, and tablets. Subscribers also can watch streamed Aereo content on a regular television via WiFi-enabled AppleTV or Roku devices.

While the broadcast companies say Aereo is retransmitting their content without paying for it, Aereo says it is creating a copy of the content and then delivering it to individual subscribers. Aereo says its technology conforms with federal laws and a 2008 court precedent involving Cablevision, which stores and transmits TV content from centralized equipment that acts as individual DVRs for subscribers.

Aereo intends to create antenna and server farms in other big TV markets. Analysts say Aereo would be a bigger threat to the $150-billion pay-TV industry if it could negotiate to carry cable channels, such as ESPN or USA, that would give it wider appeal.

Diller, the former Fox executive and chairman of IAC/InterActiveCorp., is an investor in Aereo and sits on its board.

"Today's decision is a loss for the entire creative community. The court has ruled that it is OK to steal copyrighted material and retransmit it without compensation," Fox, PBS, and others said.

"This case is still in its early stages and we are confident that when the record is fully developed the rights of content owners will be protected," NBC and ABC said in a separate statement.

Contact Bob Fernandez at 215-854-5897 or or follow on Twitter @bobfernandez1.

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