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In the latest sign of how Aereo has become a strategic threat to the TV industry, the National Football League and Major League Baseball have joined the four major broadcasters in asking the Supreme Court to stop the upstart service, which lets subscribers stream over-the-air TV to laptops and mobile devices for $8/month.
The sports leagues argue that Aereo is undercutting the value of the deals they sign with TV companies, and that they will have to respond by moving all of their games to cable stations like ESPN and NFL Network. Currently, the NFL distributes 90% of its games via the broadcasters — CBS(s cbs), NBC(s cmcsa), ABC(s dis) and FOX(s foxa) — while MLB shows 400 games a year and the World Series this way.
In a friend-of-the-court brief, reported by Variety and embedded below, the leagues warn that Aereo: “adversely impacts the more than eleven million households in the United States that do not subscribe to cable or satellite and thus do not receive non-broadcast cable networks.”
The leagues and the broadcasters are asking the Supreme Court to step in and overrule a finding by an influential New York appeals courts’ repeated findings that Aereo, which relies on tiny antennas to deliver a personal TV stream, does not violate copyright law.
It’s uncertain, however, if the Supreme Court will hear the case in the current term which ends in June, or if the Justices will wait until the 2014-15 term. Court watchers note that there is a current split in the law between the east and west coasts, but that an appeals court in California (where Aereo-like services are now illegal) has yet to rule — meaning the case may be premature.
The NFL and MLB brief is also significant because it provides a window into the evolving economics of TV in the digital era. It notes, for instance, that cable and satellite systems like Time Warner(s twc) or Dish(s dish) now pay $300 million a year for “retransmission rights” from the broadcasters, and that the sports leagues get $100 million of that.
The leagues also regard Aereo as a threat to their strategy of slicing up online sports rights into smaller and smaller pies — through products like NFL Sunday Ticket (which allows Direc-TV subscribers to watch out-of-market Sunday games) and NFL Mobile, which saw Verizon(s vz) pay $1 billion for the rights to stream some games to cellphones but not tablets.
In the view of the leagues, the Supreme Court should overrule the New York decision because it “unravels the foundation of this business model by giving broadcast retransmission rights to unlicensed commercial strangers.”
Aereo, meanwhile, has been on a roll of late, winning the rights to stream its service in Boston while going live in many more markets like Detroit and Miami. Aereo CEO, Chet Kanojia, has vowed to crush the current “bundle” model of TV which forces consumers to buy dozens of channels they don’t want in order to watch the channels they do.
Here’s the NFL and MLB brief. I’ve underlined some of the key parts:
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