UPDATED, 2:02 P.M.

SCOTUS Sides With TV Against Aereo

The justices said Wednesday by a 6-3 vote that Aereo Inc. is violating the broadcasters' copyrights by taking the signals for free. The ruling preserves the ability of the television networks to collect huge fees from cable and satellite systems that transmit their programming. Plenty of reaction from both sides.

WASHINGTON (AP) — The Supreme Court ruled Wednesday that a startup Internet company has to pay broadcasters when it takes television programs from the airwaves and allows subscribers to watch them on smartphones and other portable devices.

The justices said by a 6-3 vote that Aereo Inc. is violating the broadcasters’ copyrights by taking the signals for free. The ruling preserves the ability of the television networks to collect fees from cable and satellite systems that transmit their programming.

Aereo looks a lot like a cable system, Justice Stephen Breyer wrote for the court in rejecting the company’s attempts to distinguish itself from cable and satellite TV. “Aereo’s system is, for all practical purposes, identical to a cable system,” he said.

Aereo is available in New York, Boston, Houston and Atlanta among 11 metropolitan areas and uses thousands of dime-size antennas to capture television signals and transmit them to subscribers who pay as little as $8 a month for the service.

Company executives have said their business model would not survive a loss at the Supreme Court. Following the ruling, billionaire Barry Diller, Aereo’s most prominent investor, said, “It’s not a big [financial] loss for us, but I do believe blocking this technology is a big loss for consumers, and beyond that I only salute (Aereo CEO) Chet Kanojia and his band of Aereo’lers for fighting the good fight.”

BRAND CONNECTIONS

Some justices worried during arguments in April that a ruling for the broadcasters could also harm the burgeoning world of cloud computing, which gives users access to a vast online computer network that stores and processes information.

But Breyer said the court did not intend to call cloud computing into question.

Justices Antonin Scalia, Samuel Alito and Clarence Thomas dissented. Scalia said he shares the majority’s feeling that what Aereo is doing “ought not to be allowed.” But he said the court has distorted federal copyright law to forbid it.

Congress should decide whether the law “needs an upgrade,” Scalia said.

Broadcasters including ABC, CBS, Fox, NBC and PBS sued Aereo for copyright infringement, saying Aereo should pay for redistributing the programming in the same way cable and satellite systems must or risk high-profile blackouts of channels that anger their subscribers.

In each market, Aereo has a data center with thousands of dime-size antennas. When a subscriber wants to watch a show live or record it, the company temporarily assigns the customer an antenna and transmits the program over the Internet to the subscriber’s laptop, tablet, smartphone or even a big-screen TV with a Roku or Apple TV streaming device.

The antenna is only used by one subscriber at a time, and Aereo says that’s much like the situation at home, where a viewer uses a personal antenna to watch over-the-air broadcasts for free.

The broadcasters and professional sports leagues also feared that nothing in the case would limit Aereo to local service. Major League Baseball and the National Football League have lucrative contracts with the television networks and closely guard the airing of their games. Aereo’s model would pose a threat if, say, a consumer in New York could watch NFL games from anywhere through his Aereo subscription.

The federal appeals court in New York ruled that Aereo did not violate the copyrights of broadcasters with its service, but a similar service has been blocked by judges in Los Angeles and Washington, D.C.

The 2nd U.S. Circuit Court of Appeals said its ruling stemmed from a 2008 decision in which it held that Cablevision Systems Corp. could offer a remote digital video recording service without paying additional licensing fees to broadcasters because each playback transmission was made to a single subscriber using a single unique copy produced by that subscriber. The Supreme Court declined to hear the appeal from movie studios, TV networks and cable TV channels.

In the Aereo case, a dissenting judge said his court’s decision would eviscerate copyright law.

Judge Denny Chin called Aereo’s setup a sham and said the individual antennas are a “Rube Goldberg-like contrivance” — an overly complicated device that accomplishes a simple task in a confusing way — that exists for the sole purpose of evading copyright law.

Smaller cable companies, independent broadcasters and consumer groups backed Aereo, warning the court not to try to predict the future of television.

Indeed, Scalia himself noted that the high court came within a vote of declaring videocassette recorders “contraband” when it ruled for Sony Corp. in a case over recordings of television programs 30 years ago.

INDUSTRY REACTION TO THE DECISION

Les Moonves, president-CEO of CBS (to Bloomberg Television’s Trish Regan): “We are very pleased. Justice was served. We expected to win, but it certainly feels good to win as decisively as we did…. It’s a very good day for our future.”

Aereo CEO-Founder Chet Kanojia: “Today’s decision by the United States Supreme Court is a massive setback for the American consumer. We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter. This sends a chilling message to the technology industry.

“Justice Scalia’s dissent gets its right. He calls out the majority’s opinion as ‘built on the shakiest of foundations.’ Justice Scalia goes on to say that ‘The court vows that its ruling will not affect cloud-storage providers and cable television systems …, but it cannot deliver on that promise given the imprecision of its results-driven rule.’

“We are disappointed in the outcome, but our work is not done. We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”

FCC Chairman Tom Wheeler is declining comment on the Aereo decision, according to a spokesman. (One broadcast industry source said: “If Tom Wheeler was banking on an Aereo win at the Supreme Court to help drive more TV stations into the [spectrum] auction, he needs a plan B.”)

NAB President-CEO Gordon Smith: “NAB is pleased the Supreme Court has upheld the concept of copyright protection that is enshrined in the Constitution by standing with free and local television. Aereo characterized our lawsuit as an attack on innovation; that claim is demonstrably false. Broadcasters embrace innovation every day, as evidenced by our leadership in HDTV, social media, mobile apps, user-generated content, along with network TV backed ventures like Hulu.

“Television broadcasters will always welcome partnerships with companies who respect copyright law. Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated.”

Marci Ryvicker,Wells Fargo senior analyst: “The opinion makes it clear that this ruling will NOT endanger other technologies. Recall that during oral arguments, several justices expressed concern about the potential implications of their ruling against Aereo to other technologies, namely cloud computing. The opinion seems to be very specific to Aereo. Bottom line: Clearly a positive, and what we had been expecting according to our legal contacts. We continue to like the broadcast group and diversifieds (with emphasis on CBS given near-term catalysts and inexpensive valuation relative to peers).”

Rep. Fred Upton (R-Mich.): “While the court ruled that Aereo had overstepped, invention and innovation are at the heart of America’s global leadership in communications and technology development. This case underscores the mounting need to modernize the 80-year-old Communications Act, which serves as an important, yet outdated, framework for the communications industry. We will continue laying the groundwork toward [an update] to bring our laws into the innovation era so that the United States can  continue leading the world in developing groundbreaking technologies that drive job creation and support consumer choice, economic growth, and social  discourse.”

Rep. Greg Walden (R-Ore.): “The court’s decision reminds us that the complex communications and technology marketplace is constantly innovating and rapidly changing, and that nuances in the law can have a profound effect on content providers and consumers. Providing consumers with a vibrant and innovative content delivery system in the 21st century is an important objective of our [update]. In that effort, we will carefully balance the competing marketplace interests to make sure that this industry continues to innovate, localism is preserved, and consumers ultimately come out on top.”

Washington communications attorney Michael Berg: “This is a big win for broadcasters, sports leagues and other creators of televised programming, and ultimately for viewers. Free over-the-air broadcasts will continue. The court majority reviewed Aereo’s complex technology, concluding that for Copyright Act and Congressional intent for its practical implementation, Aereo is a ‘traditional cable system.’ The majority also rightly limited today’s ruling to ‘Aereo-like’ technology, leaving the door open to different results for other technologies in future cases.”

One of the first reactions to the court’s decision came from Alki David, whose FilmOn service also offered live streaming of some TV stations in addition to other programming, which broadcasters sued to stop. In January, an appeals court said it wouldn’t lift an injunction against FilmOn until the Supreme Court made its ruling.

“This huge blow to net neutrality and consumer rights proves my mistrust of the courts is well founded and that the policies and agencies that are supposed to protect the public interest have failed. They are indeed mere tools of a handful of corporations intent on keeping the people in a stranglehold of bad cable service at extortionist fees. The effects on values the U.S. supposedly takes pride in — from innovation to free markets to freedom of speech itself — are truly scary. But the ruling against the use of remote antennas to serve consumers the free channels they have a right to will not effect FilmOn’s overall business. Aereo, in their own words, is dead. More roadkill on the long road we’ve been on. My condolences to Barry Diller and Chet Kinojia — you fought a good fight. Call me if you need work.”

In response to today’s decision that protected also cloud-based technologies such as Cablevision’s RS-DVR., Cablevision said: “We are gratified that the court’s decision adopted a sensible middle ground, holding that unlicensed retransmission services like Aereo violate the copyright law, while protecting consumer-friendly, cloud-based technologies, such as RS-DVR. The real winner today is the consumer who will continue to benefit from future innovation.”

Tim Winter, president of the Parents Television Council: “We are greatly disappointed with today’s Aereo ruling and we believe that the majority’s opinion failed to reflect the reality of today’s media landscape. This is a ruling for the status quo that hurts consumers. Aereo had the potential to break up the bundled-channel cable TV model that is forcing Americans to pay higher cable bills year after year for channels they don’t want or don’t watch.”

Gannett Co. “is pleased that the Supreme Court has upheld the well-established copyright laws of this country. Like others in the content creating community, Gannett believes that when it provides content, appropriate payment for that content should be made. We are gratified that the Court refused to sanction Aereo’s attempt to circumvent the law.”

Gene Kimmelman, president-CEO, Public Knowledge: “It is very unfortunate for consumers that the Supreme Court has ruled against Aereo, which has provided an innovative service that brings consumers more choices, more control over their programming, and lower prices. We’re concerned that the court’s misreading of the law leaves consumers beholden to dominant entertainment and cable companies that constantly raise prices and gouge consumers. This decision, endangering a competitive choice for consumers, makes it all the more important for the Department of Justice and Federal Communications Commission to guard against anti-competitive consolidation, such as the Comcast/Time Warner Cable merger.”

Media Institute President Patrick Maines: “Aereo was using technology, in this case thousands of dime-sized antennas, in a blatant attempt to circumvent copyright law and to profit from broadcasters’ content without compensating them. The Supreme Court has struck a strong blow in support of our copyright system. The Court has affirmed that technological schemes cannot be used as loopholes to avoid paying for copyrighted content.”

The American Television Alliance: “Today’s Supreme Court ruling means that retransmission consent reform is needed now more than ever. The decision is a reminder that broadcasters are interested in only one thing – protecting their government-sanctioned monopolies. The broadcasters’ business model, which places blackouts ahead of consumers, is devoid of competition or incentive to innovate. We encourage Congress to take advantage of the opportunity that the Satellite Television Extension and Localism Act (STELA) provides to update our video rules to the 21st Century, starting with retransmission consent.”

Gary Shapiro, president-CEO, Consumer Electronics Association: “We are disappointed that the Supreme Court today ruled against innovator Aereo, but are pleased the court said it favored future innovation and specifically referred to the Sony Betamax principles of fair use as a safety valve for new services and technologies. We especially appreciate Justice Scalia’s powerful dissent describing how innovation is often opposed by incumbents who make false, ‘the sky is falling’ predictions about the future. The decision raises issues on the future of broadcasting. Given that consumers are increasingly choosing to view content ‘anytime/anywhere’ on smartphones and tablets, and only 6% of Americans rely exclusively on over-the-air television, we question how much longer broadcasters can claim to justify their use of public spectrum when they oppose innovative services like Aereo which expand their viewing audience.”

Matthew M. Polka, American Cable Association president-CEO: “ACA is concerned because it appears that the Supreme Court’s Aereo ruling negatively affects the rights of small cable operators to utilize individual antenna-based delivery of broadcast services. Although the court attempts to preserve the ability of consumers to enjoy accessing a range of time-shifted programming in the convenient manner enabled by Aereo, the decision drew lines that are not clear as to what is acceptable and what is not and, as a result, will likely have a chilling effect on technology innovators. Although ACA is disappointed that bold, forward-thinking Aereo lost the direct infringement fight in this case, we are hopeful that the court has not slammed the door entirely on Aereo and other related pioneering technologies that enable online consumers to access freely available content.”

Univision Communications said it is “pleased with the Supreme Court’s decision to uphold our country’s well-established and critically important copyright laws. This is a major victory for all consumers and content creators.”

The case is ABC v. Aereo, 13-461. Read the full decision here.


Comments (35)

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none none says:

June 25, 2014 at 10:25 am

Great news for local broadcasting!!

Terry Dreher says:

June 25, 2014 at 10:41 am

Not so good news for OTA viewers!

    alicia farmer says:

    June 25, 2014 at 10:45 am

    Huh? The SCOTUS ruling has absolutely nothing to do with normal OTA viewing.

    E B says:

    June 25, 2014 at 10:51 am

    It has EVERYTHING to do with “normal OTA viewing.” Millions of us watch nothing other than OTA and have to pay outrageous cable fees in order to get signals blocked by terrain or buildings. I was really hoping Aero would come to my market (LA) so I could drop a $60 cable bill and continue my TV watching habits via a $10 aero bill. Alas, not to be. Maybe Aero will negotiate an OTA only package with the conglomerates that own the airwaves? No, because Disney will insist on selling me ESPN and Disney and other crap I never watch.

    This is bad in the shortterm, but good in the longterm. More pressure for a la carte.

    Patrick Schooley says:

    June 25, 2014 at 10:56 am

    IDk about your market, but my cable provider will give you just local stations for like $10 a month. Or if you just buy Internet from them you can hook the cable up and just get local channels.

    Ellen Samrock says:

    June 25, 2014 at 11:44 am

    As I see it, Aereo is going to have to eat a healthy serving of humble pie and negotiate with broadcasters. And I think they will respond favorably to Aereo and work with the company. After all, it’s not in the interests of broadcasters to kill another revenue stream. No doubt, the copyright fees will be commensurate with Aereo’s revenue.

    Kristine Melser says:

    June 25, 2014 at 3:31 pm

    I think this is great for OTA viewers who can get the broadcast signals free and not have to give Aereo money for something that is available for free. My signals comes in great with my indoor amplified HD antenna. Have you tried to get OTA since 2009 when everything went digital, it’s a whole new ball game out there and the “weaker” stations often come in better than the stronger ones as I have experienced in a top 5 market and a mid size market.

    Terry Dreher says:

    June 25, 2014 at 4:50 pm

    Antenna doesn’t work everywhere. Try getting “free” signals if you live near an airport or your living space is surrounded by many tall buildings. There are too many reflections and multi-path problems to get enough signal at once to make a decent picture. The cable company here will not sell local tv channels alone. You must also buy channels you’ll never watch for $30 per month. Please tell me why the Broadcast Empires and Programming Mogels continue to act as is though the viewer/consumer is to be treated with contempt if they don’t want to buy every channel in every package the Cable/Sat provider is forced to carry? If I can’t get the local, OTA affliates with a decent signal with an antenna, what other low-cost choice is there to watch live programs?

Ellen Samrock says:

June 25, 2014 at 10:59 am

Well, Chet said he had no plan B if Aereo loses. Let’s hope he didn’t mean that and that the company is implementing plan B right now. Heck, a modest increase in subscription fees would be a plan B.

none none says:

June 25, 2014 at 11:02 am

If you want the local stations, just buy an antenna…’the good old fashion way’…It worked in 1950 it works today, and thanks to digital, you have lots more choices.

Brian Critchfield says:

June 25, 2014 at 11:38 am

I honestly thought Aereo found the loophole in this hole thing. I wonder if people would pay $15 per month for the service. When I subscribed to it in Denver, it worked really well. The technology was definitely solid.

Clayton Mowry says:

June 25, 2014 at 11:41 am

Aereo was a cable company with a tech work-around to claim that they were not. The laws of physics even will tell you that 1 million dime sized antennas will act as one antenna, Take one of the Aereo paper clip pieces of crap, stick it on a circuit board and put it in your window, bet you $100k that you’ll hate the video quality. But if they were not a cable company how do they offer Bloomberg? The Court got this one right, content has value and without being paid for it we would be in a downward spiral on the networks and you being paying $12.00 per game for the NBA and the NFL.

Teri Green says:

June 25, 2014 at 12:45 pm

Except if your one of the millions who cannot have an outside antenna and can no longer get TV. I live in Chicago and went from every single analog channel to ZERO digital channels. Pretty stupid statement to make.

    Bill Vernon says:

    June 25, 2014 at 4:38 pm

    why do you need an outside antenna? Have you tried an amplified indoor unit?

    mike tomasino says:

    June 25, 2014 at 8:40 pm

    Eric lives right under the towers in Chicago. He probably could get the local stations with a paper clip or a thumb tack. And yes, he has tried about everything (including a 8 bay long distance antenna) to pick up stations broadcasting from a few blocks away. When you have signal overload large antennas and amplification makes the problem worse.

Jeff Groves says:

June 25, 2014 at 12:59 pm

“This preserves the ability of networks to collect huge fees from cable and satellite TV systems”. Not with me, I’ve been Pay-TV Free for 7 1/2 year, and I won’t be paying for TV anytime soon. Why pay $139.00 a mon5th for crappy programming infested with advertising when you can use that money to purchase favorite programs on home video. I’m proud to be a first-wave “Cord Cutter” and I know I’m not alone.

Patrick Schooley says:

June 25, 2014 at 1:15 pm

I’m 26 and have never paid for TV in my life.

    Bill Vernon says:

    June 25, 2014 at 4:39 pm

    Good for you! Wish there were more like you in your age group.

    Just Fine says:

    June 26, 2014 at 1:58 am

    Curious how much you spent on Netflix, Hulu, Amazon Prime, Crunchyroll, iTunes, etc. to watch stuff traditionally-broadcast fare.

Clayton Mowry says:

June 25, 2014 at 2:04 pm

Ericpost, that is what CATV building antennas are for. So you are saying that if Aereo can’t hijack the signal and sell it that you can’t get TV. Grow up! Aereo can pay for content like every MPVD and still sell you the service. Cable was invented for terrestrial signal challenges, You need something for nothing, the read a book from the library.

Joel Ordesky says:

June 25, 2014 at 2:32 pm

I’ve been using Aereo for the DVR and a roof-top antenna for live TV. Now it looks like I need to find another DVR, ,something like TIVO or ‘simple.tv’ Hopefully the SCOTUS decision won’t have a negative impact on them.

    mike tomasino says:

    June 25, 2014 at 8:46 pm

    Those are covered under Betamax.

Warren Harmon says:

June 25, 2014 at 2:56 pm

I TOLD YOU SO – I TOLD YOU SO – I TOLD YOU SO, IT WAS THE CORRECT DECISION BECAUSE AEREO=THEFT

    Warren Harmon says:

    June 25, 2014 at 3:02 pm

    Also think about how much IP bandwidth will be preserved. Freking rediculous to put multiple distributed video on the internet. Watch your real time media on appropriate distributions like OTA and Cable CHANNELS. 🙂

Clayton Mowry says:

June 25, 2014 at 3:54 pm

You are correct! Aereo crashed during the Academy Awards, what would happen during the Super Bowl or the College Bowl games?

Keith ONeal says:

June 25, 2014 at 4:09 pm

The decision also affects FilmOnX to a certian extent. But, they have a back up plan whereas Aereo does not. The plan for FilmOnX is 2 fold: 1) Originate programming and channels of their own, and, 2) import networks and stations from countries like Canada, the United Kingdom, Australia, New Zealand, etc. They have done both since they started, and that is how they will survive. Aereo has no Plan B; they will have to go out of business.

Gene Johnson says:

June 25, 2014 at 4:33 pm

If Aereo wants to continue it means working out a licensing deal with local broadcast stations in each market in which it operates, not unlike CATV systems. If cable can do it, so can Aereo, if it wants to and thinks there’s a sufficient customer base for its service going forward. It is hard to know how much local stations would seek to obtain from Aereo for carrying their signals, but even if you use current retransmission consent deals it likely would amount to a 50% increase in subscriber costs, give or take. What would that do to its customer base? Who knows? Heck, we don’t even know what its customer base is. It is up to Aereo to decide if it wants to try to pursue the obvious path forward, fold up the tent (unlikely given the investment made thus far), or try something else.

Joseph Koskovics says:

June 25, 2014 at 4:40 pm

Proves Scalia, Thomas and Alito are truly idiots. Aereo was nothing but a Rube Goldberg attempt to steal content. Nothing more, nothing less.

Bruce Morrison says:

June 25, 2014 at 4:50 pm

Aereo made sense for me because I am far enough from the city that over the air antennas don’t work well, but still allows me to be a viewer of Over The Air Channels that I might not otherwise be a watcher of, including all of the commercials, had Aereo not existed. I think the Networks lose viewers because of this and I think their ratings go down even further.

Michael Lam says:

June 25, 2014 at 4:57 pm

Great to see theft of content owners and broadcasters stopped. Aereo couldn’t be shut down fast enough. Good lessons to consumer electronics developers: don’t think theft can be made legal by an obscure loophole. The intent and the letter of the law were protected – a rare and valuable win for everyone conducting legitimate business. Odd how these people can steal millions of dollars from subscribers on this kind of scam, as well as steal from broadcasters, and have no fear of going to jail…

ABELARDO BLANCO says:

June 25, 2014 at 5:27 pm

finally–broadcasters get something from Washington DC besides the shaft.

none none says:

June 25, 2014 at 5:30 pm

Aereo could offer a lower prices option to consumers by just offering the local stations, just pay for the content and everyone will be happy (well, almost everyone) but if you are going to offer someone elses content and make a profit then you should pay for it.

Jay Miller says:

June 25, 2014 at 6:31 pm

Barry Diller is a frustrated malcontent and got what was coming to him after all these years. He is no friend to broadcasters and has been a bitter man since Fox fired him..Good!!!He has a big overblown ego and little else…Maybe now he will finally go away!!!!

Jay Miller says:

June 25, 2014 at 6:31 pm

Barry Diller is a frustrated malcontent and got what was coming to him after all these years. He is no friend to broadcasters and has been a bitter man since Fox fired him..Good!!!He has a big overblown ego and little else…Maybe now he will finally go away!!!!

Joli Francis says:

June 25, 2014 at 11:41 pm

Oh Puhleeze give me a break, there are extremely few places that an appropriate OTA antenna will not work very well to receive free TV. The Supremes got this one right – Aereo is a Rube Goldberg pseudo engineered contraption that was solely built to try to evade copyright law – Barry Diller made no secret of that. I’m all about free OTA TV. The only OTA viewers who this affects are those who won’t make even the most minimal of efforts to use an appropriate antenna. Paid TV is made for those TV addicts too lazy to lift a finger, they deserve to have their money taken by the MSO megapolies.


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