Aereo says it can operate like cable TV after Supreme Court case

SAN FRANCISCO – Aereo Inc., the streaming video startup that halted service after the U.S. Supreme Court ruled it violated broadcasters’ copyrights, said it believes it can still operate like a cable TV service after the decision.

Aereo said in a letter to U.S. District Judge Alison J. Nathan in Manhattan that, according to its interpretation of the Supreme Court ruling, it’s entitled to license programming and its transmissions won’t infringe broadcasters’ rights.

“Although Aereo has temporarily suspended operations, Aereo believes that it can still operate in accordance with the terms of the Supreme Court’s decision and intends to do so,” the company said in the letter.

The court ruled Aereo violated broadcasters’ copyrights by selling programming online without paying licensing fees. Broadcasters said Aereo, which is backed by billionaire media mogul Barry Diller, 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. Nathan is considering what to require in an order enforcing the top court’s June 25 decision.

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Aereo, based in Long Island City, N.Y., set out to give customers who didn’t want to pay for cable-TV bundles another way to watch broadcast television. The startup’s service, costing as little as $8-a-month for customers in 11 cities, recorded programming from an off-site antenna and delivered it via the Internet. It said June 28 that it would halt service.

Dismissal sought

CBS Corp. said in the same letter to the judge on Wednesday that, in light of the Supreme Court’s ruling, Aereo’s legal bid to reinstate its service should be dismissed. The letter was a joint statement of the dispute by Aereo and the broadcasters.

A Supreme Court victory for Aereo might have endangered revenue collected by broadcasters. The startup didn’t pay licensing fees for the over-the-air programming it collected, potentially giving other cable providers a way to avoid such payments.

The industry’s payments are estimated to exceed $4 billion this year, a 30 percent gain from last year, according to SNL Kagan. CBS’s $2.2 billion in affiliate and subscription fees accounted for about 15 percent of its total revenue last year. Comcast Corp.’s NBCUniversal unit got $1.4 billion in revenue for licensing broadcast content, making up 6.1 percent of NBCUniversal’s sales.

‘Meaningful alternatives’

Aereo CEO Chet Kanojia said Wednesday in a statement that the company is mapping its next steps.

“We remain committed to building great technologies that create real, meaningful alternatives for customers,” he said in the statement.

In a separate letter in a related case before Judge Nathan, American Broadcasting Cos. said it will seek an order, consistent with the Supreme Court decision, blocking Aereo from violating its rights.

Determining other ways in which the litigation can move forward has been “rendered nearly impossible,” ABC wrote, saying Aereo has refused to explain whether it can continue operating or how.

Aereo’s lawyer suggested July 1 that it has “rethought its entire legal strategy,” and will present a new defense, according to ABC. The broadcaster argued that the case should be halted until the Supreme Court’s order blocking Aereo from violating its rights is in place.

Irreparable harm

“That is the most important next step, given the court’s ruling that Aereo has been violating plaintiffs’ exclusive rights to publicly perform their works for over two years, during which time plaintiffs, as this court held, have suffered irreparable harm,” ABC wrote in the letter.

Aereo agreed that the case should be put on hold until Nathan has “resolved the injunction issues.”

“After the Supreme Court’s decision, Aereo is a cable system with respect” to the near-live transmissions at issue, Aereo said in the joint letter. Aereo’s eligibility for such a license “must be decided on an immediate basis or Aereo’s survival as a company will be in jeopardy,” the company wrote.

Aereo also had distributed Bloomberg TV to subscribers. Bloomberg LP is the parent company of Bloomberg News and Bloomberg Television.

The cases are Aereo v. CBS Broadcasting Inc., 13-cv-03013, and American Broadcasting Cos. Inc. v. Aereo Inc., 12-cv-01540, U.S. District, Southern District of New York (Manhattan).

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