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Aereo

Media


A giant, but perhaps not unexpected, decision against Web TV startup Aereo: The Supreme Court has ruled against the company, which wanted to stream broadcast TV without paying programming fees.

In a 6-3 ruling, the court ruled that Aereo is essentially a cable TV company, which needs to pay copyright owners if it wants to transmit their shows to subscribers, instead of an antenna rental company, as Aereo has argued. Key line: “We conclude that Aereo is not just an equipment supplier.”

Aereo CEO Chet Kanojia had previously said that if he lost this case, there was no “plan B,” which would mean Aereo would have to shut down. We will see. Aereo had raised close to $100 million, much of it from Web comglomerate IAC, over the last few years.

In his order, Justice Stephen Breyer also addresses Aereo’s argument, seconded by a wide swath of tech companies, that a ruling against Aereo could harm other companies that rely on “cloud” storage.

That shouldn’t be a problem, he writes: “We agree that Congress … did not intend to discourage or to control the emergence or use of different kinds of technologies. But we do not believe that our limited holding today will have that effect.”

Here’s the victory dance statement from Paul Clement, the attorney who represented ABC and the other broadcasters that sued Aereo: “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.”

And another one from ABC: “We’re gratified the Court upheld important Copyright principles that help ensure that the high-quality creative content consumers expect and demand is protected and incentivized.”

Diller’s response: “It’s not a big (financial) loss for us, but I do believe blocking this technology is a big loss for consumers, and beyond that I only salute Chet Kanojia and his band of Aereo’lers for fighting the good fight.”

And now, a statement attributed to Kanojia. Note that he leaves some sort of wiggle room for the company’s survival at the end:

Today’s decision by the United States Supreme Court is a massive setback for the American consumer. We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter. This sends a chilling message to the technology industry. It is troubling that the Court states in its decision that, ‘to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress.’ (Majority, page 17) That begs the question: Are we moving towards a permission-based system for technology innovation?

Consumer access to free-to-air broadcast television is an essential part of our country’s fabric. Using an antenna to access free-to-air broadcast television is still meaningful for more than 60 million Americans across the United States. And when new technology enables consumers to use a smarter, easier to use antenna, consumers and the marketplace win. Free-to-air broadcast television should not be available only to those who can afford to pay for the cable or satellite bundle.

Justice Scalia’s dissent gets its right. He calls out the majority’s opinion as ‘built on the shakiest of foundations.’ (Dissent, page 7) Justice Scalia goes on to say that ‘The Court vows that its ruling will not affect cloud-storage providers and cable television systems, see ante, at 16-17, but it cannot deliver on that promise given the imprecision of its results-driven rule.’ (Dissent, page 11)

We are disappointed in the outcome, but our work is not done. We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.

And here’s how Kanojia used to pitch Aereo, in a 2013 interview I conducted with him at the Dive into Media conference:

And here’s the court’s ruling:

ABC v. Aereo.pdf



8 comments
JMWJMW
JMWJMW

I've just finished reading the opinion, and -- just as importantly -- Scalia's dissent. 


It is important to remember that the "matter before the court" was whether a preliminary injunction should prevent Aereo from operating during the pendency of the lower court proceeding on the full case. 


If Scalia's opinion had been the majority opinion and no preliminary injunction issued, then it is clear from Scalia's dissent that Aereo would have lost the underlying case a few years down the road. 


Then there is the matter -- alluded to in both the majority opinion and Scalia's dissent -- that there is the question as to whether Aereo's system performs as Aeroe says it does.  Many people knowledgeable in radio-frequency engineering assert that Aereo's system violates the laws of physics, in particular to VHF transmissions.

bobsulli
bobsulli

Does lawyer Paul Clement explain HOW "today's decision is a victory for consumers"? It's a victory for ABC et al.

I agree the DVR functionality was a killer. Perhaps AEREO should have executed differently. Start with a product that works from my home. Then offer a premium version that works from their downtown hub. Then offer DVR-like functionality. Then the court could have ruled on which stage of that progression broke the law.


Leedo
Leedo

This makes total sense. Aereo is just Cable Television circa 1960 with an internet twist. Cable TV came was born in the late 50's/early 60's for rural communities that were too far from a broadcast center. they would put up an antenna on top of a hill/mountain and then run a _cable_ to every subscriber. Now that "cable" is bridged over TCP/IP and shows up on my tablet/smartphone. What is the difference?


The difference is that the old cable TV model is totally worthless and antiquated. Instead of trying to squash this, the TV companies should have been tripping over themselves to make Aereo successful. More eyeballs on their content and advertising? How do they lose?

Dantm44
Dantm44

Surprised the ruling came down due to the technicality that it did, but then again, this SC is pro-business. I thought Aereo had sufficiently "boxed" their product to guard against public performance issues - I think they should have skipped the DVR functionality - as they had the best argument with converting a process to a newer method, but leaving the revenue stream of the stations intact. (the stations don't receive revenue if people can skip commercials.) I think they should go through with negotiation with content providers at this point - but the cost might just be too prohibitive - probably see their fees double, triple or quadruple. At that point you might as well get cable. Maybe a city by city negotiation might work.

I too am no legal expert, but I have been working in television and public relations for 15 years and follow media/tech/patent law issues with extreme interest.

Age8E
Age8E

I'm no legal expert, but I'm having a hard time understanding why Aereo never argued that they're providing a service that corrects a problem the government introduced: that terrestrial broadcasts no longer reach the number of customers they did during the analog days, because of lower-powered transmitters and the digital "cliff" effect. 


That's why I used them, and it seems like a more compelling argument than, "Let us keep operating because we don't think we're -technically- breaking any laws!"

JMWJMW
JMWJMW

@Dantm44  Don't businesses create and distribute content?  How can a decision that supports that model and prevents a free-rider be "anti-consumer?"

Dantm44
Dantm44

One more thing - like Age8E said - everything I read about their actual SC argument seemed to be lacking. That's probably why they lost more than anything else.

JMWJMW
JMWJMW

@Age8E  because, in large part, that notion is false.

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