Bloomberg News

Aereo Defends Online TV Service as Networks Seek Shutdown

May 31, 2012

Aereo Inc., the Barry Diller-backed online television service that is trying to prevent a court- ordered shutdown, told a judge it doesn’t violate copyrights because it is only retransmitting over-the-air programming.

Aereo and the four biggest U.S. TV networks -- Comcast Corp. (CMCSA:US)’s NBC, CBS Corp. (CBS:US), Walt Disney Co. (DIS:US)’s ABC and News Corp. (NWSA:US)’s Fox -- delivered closing arguments today in a two-day trial to determine whether U.S. District Judge Alison Nathan will issue a preliminary injunction that would halt the service.

“There is no question that the transmission to the Aereo consumer is a private performance,” David Hosp, a lawyer for Aereo, told the judge at a hearing in Manhattan. “They’re asking you to extend copyright protection in a way Congress never contemplated.”

The networks sued Aereo in March claiming that it wasn’t authorized to capture their broadcast signals and retransmit them to subscribers. Aereo, in transmitting programming to subscribers’ Internet-connected televisions and mobile devices, violated the law by engaging in a public performance of the copyrighted works without a license, the networks said.

“It’s not a broadcasting medium,” Steven Fabrizio, a lawyer for the networks, told the judge. “It’s an Internet medium exclusively. Our clients have an opportunity to develop that market with their own content for their benefit.”

‘Not Imminent’

Aereo said that its subscribers can access a remotely located antenna and digital video recorder to receive local TV programming and play it back. The service was introduced in New York City in March at a subscription price of $12 a month. The networks knew about Aereo for about a year before they sued, said Michael Elkin, a lawyer for the company.

“There’s a reason they didn’t bring a claim earlier,” Elkin said in court. “The harms are not imminent. They’re speculative and remote.”

The networks said in court that they might lose advertising revenue if Aereo were to remain in business, because its subscribers wouldn’t be measured for the ratings that determine ad rates.

“What will happen is you won’t see Sunday Night Football on free TV,” Bruce Keller, a lawyer for the networks, told the judge. “It will all migrate to a pay-per-view program.”

Diller’s company, IAC/Interactive Corp. (IACI:US), led a $20.5 million round of financing for Aereo, it was announced in February. Diller is on the Aereo board.

The cases are American Broadcasting Cos. v. Aereo, 12-1540, and WNET v. Aereo, 12-1543, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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