Aereo Ruling Doesn’t Bode Well For Stations

Securities analyst Marci Ryvicker warned today that broadcasters could lose their copyright suit against online video distributor Aereo, given the language a federal judge used yesterday in turning down the broadcasters’ request for a preliminary injunction.

“While the ‘heart’ of this case is not over, the language was clearly more negative than we had anticipated,” Ryvicker and her team at Wells Fargo say  in a note to clients.

“We do not believe that there is real risk to retrans dollars, but do think the headlines from last night’s news could pressure some of the large market TV stocks.”

“Most alarming” is the judge’s finding that the broadcasters “have not shown likelihood of success on the merits,” the note says.

The ruling relied on the 2008 remote-storage DVR ruling, in which a federal appeals court said that Cablevision’s service did not violate programmers’ copyright because the cable operator made each recording at the request of a single customer and the recording could only be viewed by that customer.

That, according to the court, make it a private performance rather than a public performance that triggers copyright liability.

In its request for an injunction against Aereo, the broadcasters said that the Cablevision precedent wasn’t relevant because it involved time-shifting and Aereo provides a live broadcast service.

But the judge dismiss the argument, saying that the court in the Cablevision did not focus on time-shifting in its analysis.

“In plain English, the networks’ attempt to distinguish their case from the Cablevision case by arguing that live viewing should be treated differently than time-shifting technology failed,” the Ryvicker note says.

Despite the legal setback, it says, the broadcasters ultimately have little to fear from Aereo. “Aereo is not a compelling product and therefore not a real threat to the TV ecosystem.”

Broadcasters led by the Big Four networks have said they will appeal the denial of the injunction.