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: