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Aereo Loses Supreme Court Fight Against Broadcasters
Aereo Loses Supreme Court Fight Against Broadcasters

By Jennifer LeClaire
June 25, 2014 12:18PM

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The fact that the U.S. Supreme Court has sided with broadcasters and ordered Aereo to pay them to retransmit their TV programs should make cable television and networks happy. However, the decision against Aereo should also be a wake-up call for them because there will be other significant challenges from new competitors, said analyst Jeff Kagan.
 


On Wednesday, the U.S. Supreme Court ruled that Aereo has to pay broadcasters to retransmit their television programs through its cloud service so subscribers can watch their favorite shows on mobile devices. Six of the nine justices decided the Internet startup was violating broadcasters’ copyrights by taking their signals without offering payment.

With Aereo, consumers can pause, rewind and fast-forward any program that they are watching live, or save programs for future viewing. Aereo membership starts at $8 a month. Aereo is available in New York, Boston, Atlanta, Salt Lake City, Miami, Houston and Dallas. But more cities were in the works. Now, the future of the company is uncertain.

Although Aereo CEO and Founder, Chet Kanojia, was confident the high court would validate and preserve a consumer’s right to access local over-the-air television using an individual antenna, make a personal recording with a DVR, and watch that recording on a device of his choice, a majority of justices didn’t agree with his company’s argument.

A Massive Setback

“Aereo’s activities are substantially similar to the (cable) companies that Congress amended the (Copyright) Act to reach,” Justice Stephen Breyer wrote for the majority. “Aereo is not simply an equipment provider,” Breyer reasoned, adding that “when Aereo streams the same television program to multiple subscribers, it transmits a performance to all of them.”

“The networks make dire predictions about Aereo,” Justice Antonin Scalia wrote in dissent. “We are in no position to judge the validity of those self-interested claims or to foresee the path of future technological development.”

Of course, Kanojia feels Scalia got it right, calling out the majority’s opinion as “built on the shakiest of foundations.” Scalia also said, “The Court vows that its ruling will not affect cloud-storage providers and cable television systems, but it cannot deliver on that promise given the imprecision of its results-driven rule.”

Kanojia called the decision a “massive setback” for the American consumer and “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’,” Kanojia said. “That begs the question: Are we moving towards a permission-based system for technology innovation?”

Aereo: Our Work is Not Done

We caught up with Jeff Kagan, an independent technology analyst, to get his take on the ruling. He didn’t offer an opinion on who is right or wrong, but rather told us the next question is what will Aereo do now? Does the company have a plan B or will it just shut down?

“This is the risk with new ventures that challenge the current system,” Kagan said. “Cable television and networks should be happy about this win, but they should also now be awake because there will be other significant challenges from new competitors. Prices must come down and customer care must be top of mind. What happens next is the question of the day.”

Kanojia didn’t explicitly answer that question. He concluded his reaction by vowing, “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.”
 

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