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Summary:

Well, that was quick. Two weeks ago, media mogul Barry Diller announced an ambitious cloud-based TV service that streams over-the-air channe…

Cord cutting / cutting the cord
photo: Shutterstock / Mikhail Melnikov

Well, that was quick. Two weeks ago, media mogul Barry Diller announced an ambitious cloud-based TV service that streams over-the-air channels to internet devices for $12 a month. This week, broadcasters offered their opinion in the form of a lawsuit that seeks to shut off the service which is set to go live on March 14.

Fox (NSDQ: NWS), Univision and PBS filed a complaint in Manhattan federal court that claims Aereo infringes their copyright and that the upstart’s technology fails to qualify for a legal loophole.

Aereo works by taking over the air signals that are free to everyone and retransmitting them to individual “dime-sized antennas” that let consumers watch the content on internet devices.

Aereo plans to launch its service in Brooklyn and then roll it out across the company to subscribers who will pay $12 a month.

The company’s pitch is: “Live Broadcast TV, meet the Internet. Finally. With Aereo you can now watch live, broadcast television online. On devices you already have. No cable required.”

As my colleague Daniel Frankel recently explained, the broadcasters were unlikely to let Aereo open shop in peace after they had spent years fighting to extract lucrative carriage fees from cable companies to reproduce their channels.

Aereo is another in a succession of internet companies that have sought to disrupt traditional TV-watching. Many of the others have been sued out of existence; and Aereo has said it is anticipating a legal challenge and has a theory to get around the copyright issue.

That theory is likely to turn on a distinction rooted in the analog era that distinguishes between transmitting to one or to many viewers. Cablevision (NYSE: CVC), for instance, successfully defended its remote digital video recorder technology, after an appeals court found that there was no transmission to the public. Under the plan, each individual subscriber was connected to their own dedicated DVR at Cablevision’s head end, in much the way each Aereo subscriber is linked to their own personal dime-sized digital antenna.

In their complaint against Aereo, the broadcasters argue, “It simply does not matter whether Aereo uses one big antenna to receive Plaintiffs’ broadcasts .. or ‘tons’ of ‘tiny’ antennas .. No amount of technological gimmickry by Aereo or claims of sophisticated ‘rabbit ears’ change the fundamental principle of copyright.”

The broadcasters are seeking damages and a permanent injunction.

Update: A second group of broadcasters, including ABC (NYSE: DIS), filed a related lawsuit. Aereo has since responded with a statement saying the suits have no merit. Here is the legal tack Aereo plans to take:

Consumers are legally entitled to access broadcast television via an antenna and they are entitled to record television content for their personal use.

Broadcasters v. Aereo

  1. armchairlawyer Friday, March 2, 2012

    Aereo is DOA, here’s why:

    Here is the definition of ‘publicly perform’ given in Section 101 of the Copyright Act:

        To perform or display a work “publicly” means—

        (1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or

        (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

    The first clause above is easy enough to understand, and is not at issue with Aereo.

    It is the second clause above that is the critical one in the case. If you read the clause carefully, you can see why the the Broadcasters’ are citing this clause in their lawsuit. Aereo concedes that they are transmitting and performing the Broadcasters’ works based on the Copyright Act, which states that a public performance may take place at different places and at different times.

    Any antenna, no matter the size, infringes copyright if works are transmitted from one place to another place.

    In order to win the case, Aereo would need to persuade the District Court–and in all likelihood, the Second Circuit Court of Appeals–to adopt an interpretation of the public performance definition that differs from the cases up to this point.
     

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    1. An antenna that receives and subsequently retransmits over-the-air content is the basis of community antenna television (CATV). This is legal, and has been in operation for decades.

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      1. armchairlawyer Friday, March 2, 2012

        It infringes copyright, unless they pay the compulsory license, which pays content owners (like all cable systems do). And if they paid the compulsory license they wouldn’t need some gimmick like “tons of antennas”.

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    2. flibberyGivIt Friday, March 2, 2012

      redacted

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    3. There’s an appeals court out there somewhere that doesn’t agree with you, or at least according to the article that I just read. Something about Cablevision…

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  2. invitedmedia Friday, March 2, 2012

    $12 a month sounds like a lot for the crap that passes as local tv these days.

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  3. Perhaps the real question is who in their right mind would be willing to pay $12 per month for only the content they can already receive for free? 

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    1. To get it for free you would have to go home and sit in front of a traditional TV. Most of the time you can’t get this content at all, let alone for free. At work? At Starbucks? Sitting in the airport? On the train? Nope.

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    2. BroadcastAssassin Friday, March 2, 2012

      You can receive it for free if you a) have a TV, and b) have a digital antenna. If you do not (an admittedly rare use case common mostly in college students, young people, digital natives, and low income households), $12 a month for a year is probably less than a TV and an antenna would cost to purchase.

      But really, Aereo’s value proposition is not as a digital antenna replacement for the living room TV. They offer a DVR service included, and most importantly can pipe the programming to any internet connected device with a screen – your smart phone, tablet, laptop, etc.

      Being able to watch live broadcast TV on whatever screen is convenient is potentially worth $12 a month. In our household, we have 1 TV that could show this programming for “free” (but not record it). We also have 3 laptops, 3 smart phones, and two tablets that cannot do either.

      That said, I wouldn’t pay for Aereo – not because I don’t see value in their service, but because there’s nothing on those stations I would pay more than a Netflix subscription to watch.

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  4. flibberyGivIt Friday, March 2, 2012

    Sounds like the Aero people are selling a USB TV tuner what’s got a WiFi
    connection instead of a USB cable.

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  5. Jill Kennedy Monday, March 5, 2012

    It’s an interesting debate but I think the eventual death of broadcast networks will screw things up for Aereo.  
    http://mankabros.com/blogs/onmedea/2011/04/01/broadcast-networks-on-death-and-dying/

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  6. [...] signals. In addition to its legal tussle with Dish over ad skipping, the TV networks are also suing Aereo, a start-up service that uses tiny antennas to broadcast shows directly to viewers’ [...]

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