The U.S. Supreme Court dealt what is likely to be a fatal blow to online-streaming service Aereo and its dream to transform the TV industry, ruling that the Barry Diller-backed startup violates broadcasters’ copyrights.
The 6-3 ruling is a triumph for broadcast companies, including Walt Disney Co.’s ABC, 21st Century Fox, Comcast’s NBCUniversal and CBS. They said Aereo was threatening the underpinnings of the industry by selling programming online without paying licensing fees.
Aereo sought to give consumers a new way to watch broadcast TV without buying cable or satellite packages. It let each user stream over-the-air video using a tiny antenna stored at an Aereo facility and connected to the Internet. Customers in 11 cities have been able to watch live and recorded broadcast programs for as little as $8 a month.
“The Supreme Court’s opinion appears to be sweeping and definitive that Aereo is illegal, which we think takes Aereo out of operation as we know it,” Marci Ryvicker, an analyst at Wells Fargo, wrote in a note Wednesday. “The ruling does not appear to leave Aereo much opportunity to maneuver.”
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Aereo vowed to keep battling, though it didn’t specify how.
“We are disappointed in the outcome, but our work is not done,” CEO Chet Kanojia said in a statement. “We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”
“It’s not a big (financial) loss for us, but I do believe blocking this technology is a big loss for consumers,” Diller said in a statement.
Broadcasters said Aereo threatened to create a blueprint that would let cable and satellite providers stop paying billions of dollars in retransmission fees each year to carry local programming. With those fees estimated to exceed $4 billion this year, some broadcasters said they might convert to cable channels if Aereo weren’t shut down.
CBS said in a statement, “We are pleased with today’s decision, which is great news for content creators and their audiences.”
The ruling is also a win for the National Football League and Major League Baseball, which said Aereo is exploiting their copyrighted telecasts. The NFL told the court that Aereo’s legal arguments would let the company provide distant signals as well as local ones, so customers could watch games from around the country without compensating the league.
Justice Stephen Breyer wrote the court’s majority opinion. Justices Antonin Scalia, Clarence Thomas and Samuel Alito dissented.
The court fight centered on a provision in the federal copyright law that gives owners the exclusive right to perform their works “publicly.”
Breyer said Aereo violated that provision, operating much like the cable-TV providers that Congress intended to include when it updated the law in 1976.
“Aereo is not simply an equipment provider,” Breyer wrote. “Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, almost as they are being broadcast.”
Aereo contended that a ruling against the company would endanger cloud computing, the business of storing videos and other content for customers on remote servers. The majority today said the ruling was a limited one that wouldn’t affect cloud computing.
“We cannot now answer more precisely how” U.S. copyright law “will apply to technologies not before us,” Breyer wrote. He noted that cloud-based storage services offer people a way to play material they already received lawfully.
CBS Chief Executive Les Moonves said his opposition to Aereo’s service didn’t foreclose the possibility of working with cloud-computing providers.
“We’re not against the cloud. We never were,” he said in an interview. “We’re against people not paying us for our content.”