Broadcasters Sue To Stop $12 Streaming Service Aereo

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