The four biggest television networks filed a 59-page brief Monday to the Supreme Court detailing how online video startup Aereo is essentially stealing their programming and undermining their business model.
Broadcasters argued that Aereo, which provides broadcast TV shows to subscribers over the Internet without paying licensing fees to stations, is violating federal copyright law designed to protect content creators and distributors. Aereo has denied violating broadcasters’ copyrights through its unique online delivery system, although the company joined broadcasters in asking the Supreme Court to review the case.
Aereo offers access to local broadcast channels over the Internet, skirting around federal rules by renting subscribers remote access to programming and cloud-based DVRs via tiny antenna farms.
The case is being closely watching by the media industry and Wall Street because a win by Aereo could undermine the TV industry’s business model of charging pay-television companies fees for the rights to rebroadcast local TV stations. ABC, CBS, Fox and NBC nod to that issue in their filing:
A ruling against Aereo would pose no threat to innovative online-distribution services such as Hulu, Netflix, and Amazon. Those services, after all, pay for the right to use copyrighted content.…A ruling for Aereo, by contrast, would be deeply problematic: It would launch a race by cable and satellite companies to develop competing methods to capture copyrighted content and re-sell it without paying for the right to do so. That would give broadcasters little choice but to reconsider the quality and quantity of programs they broadcast for free over the air.
In November, the National Football League and Major League Baseball made similar arguments in a filing in support of broadcasters. The sports leagues warned that Aereo or similar services would undercut their ability to license their games exclusively to certain stations or services (like DirecTV’s Sunday Ticket football subscription).
“The option for copyright holders will be to move that content to paid cable networks (such as ESPN and TNT) where Aereo-like services cannot hijack and exploit their programming without authorization,” the leagues warned in their brief.
NBC, which is part of this suit, is an investor in Re/code.
Aereo has won a series of battles in lower courts, but it suffered a legal setback last week, when a federal judge in Utah found in favor of broadcasters in a similar case and granted a preliminary injunction to prevent Aereo’s service from being offered in six western states. The order was stayed pending the Supreme Court’s review.
The Supreme Court is scheduled to hear oral arguments in the Aereo case on April 22 with a decision likely in June.