Can Aereo Survive a Broadcaster Assault?

It's a matter of when, not if, Aereo will draw a lawsuit that could be its death sentence, an analyst predicts.

"Someone will sue them; it's just a matter of time," says Colin Dixon, senior partner at The Diffusion Group (TDG) .

And if that "someone" gets an injunction to shut down the service for the duration of the case, well ...

"Then Aereo is effectively dead," Dixon says.

Aereo, which plans to deliver local TV channels via the Internet to New York City customers for $12 per month, has raised $25 million from backers including Barry Diller. But it might not be enough to survive an injunction. "These cases can take years," Dixon says. (See Aereo Makes Cord-Cutting Bid in NYC.)

A lawsuit would probably come from the broadcasters, which are eager to protect a business model that's reliant on lucrative retransmission fees from cable operators and other pay-TV providers.

Fox Broadcasting Co. could be first, Dixon predicts. "They've been among the most aggressive with retrans." (See Fox to TW Cable: Stop Streaming Our Stuff .)

No broadcaster has made a move yet. Their big pressure group, the National Association of Broadcasters (NAB) , has so far declined to comment about Aereo.

Aereo almost expects to be sued but doesn't word it that way. "I'm sure there will be challenges," CEO Chet Kanojia said at the company's launch event Tuesday in New York. "We'll deal with it."

Mounting a defense
Dixon actually likes Aereo's chances of defending itself, short of a being hobbled by an injunction, since he believes there's precedent for every component of its service.

For example, Cablevision Systems Corp. (NYSE: CVC)'s successful defense of its remote-storage DVR has already seemingly cleared the way for network DVRs such as Aereo's. (See Supremes Stand Clear of RS-DVR Case.)

Programmers could try to hit Aereo on copyright grounds, arguing that it doesn't have permission to transmit their signals across a wire. However, Sling Media Inc. already does this with its place-shifting device and has yet to run into any legal challenges. (See Why Is Sling Getting a Free Pass? )

The story's different with ivi Inc. , a company that tried to redistribute broadcast TV channels over the Internet for $4.95 per month. Ivi was shut down because it did not qualify as a cable system, a designation that would have allowed it to offer programming for a $100 per year compulsory license. Company founder Todd Weaver has been asking for handouts to help ivi stay alive as it mounts its defense. (See Court Cuts Ivi's Web TV Signal.)

A big difference between ivi and Aereo has to do with signal limitations. While ivi customers tended to receive broadcast feeds from distant markets, Aereo is taking special care to ensure that its customers reside in the NYC demographic market area (DMA).

On possible trouble spot for Aereo is its reliance on a large array of dime-sized antennas that receive the broadcast signals before sending them along to customers via the Internet. Each customer is assigned to one and essentially rents it -- a model that would seem to fit well with a network DVR that rents out storage. However, Zediva, a startup that tried to rent out DVD titles by streaming them over the Internet, was slapped with a preliminary injunction last August when a federal judge found that the service didn't stand up to copyright laws.

But Aereo believes its use of individual antennas rather than a master antenna puts it on the right legal footing. "Until you essentially eliminate your membership to our technology, that antenna remains with you," Kanojia told Light Reading Cable last May, when Aereo was still known as Bamboom Labs.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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joanengebretson 12/5/2012 | 5:42:23 PM
re: Can Aereo Survive a Broadcaster Assault?

I was wondering why every Aereo customer was getting a dedicated antenna. The legal argument seems to be the same sort of nonsense that requires every satellite TV customer in a condo to have his own dish. At this won't be as unsightly as all those dishes on all those balconies.

Jeff Baumgartner 12/5/2012 | 5:42:23 PM
re: Can Aereo Survive a Broadcaster Assault?

Todd Weaver's video plea for help is rather strange, but he's got his messages nailed down, albeit a bit repetitive... okay, maybe that's the point in driving them home. JB

JessicaTY 12/5/2012 | 5:42:22 PM
re: Can Aereo Survive a Broadcaster Assault?

Barry Diller, the TV entrepreneur who created FOX and USA Broadcasting, made a presentation Tues at his IAC offices. Diller announced his company was backing a brand new start-up called Aereo that will allow customers to watch live television broadcasts on iPads and other gadgets. Article source: Barry Diller to broadcast live TV on mobile devices

For me having a t.v available on my iPad is a great help. I often miss the news on t.v because of my work schedule but through this, it helps me to watch news anywhere I am.

kirstenwilson 12/5/2012 | 5:42:22 PM
re: Can Aereo Survive a Broadcaster Assault?

The "Aereo" actually works by sending live Television broadcast signal to personal devices via a dedicated tiny HD antenna over the internet. I an send a video steam per viewer, and thereby circumventing legal barriers. There's no difference, because it broadcasts the media live over a personal antenna, just like a television. 

Jeff Baumgartner 12/5/2012 | 5:42:20 PM
re: Can Aereo Survive a Broadcaster Assault?

You bring up the convenience angle... would you be looking to augment your pay-TV subscription with Aereo or would a service like this give you reason to cut the cord and rely on broadband for your video needs? JB

Jeff Baumgartner 12/5/2012 | 5:42:20 PM
re: Can Aereo Survive a Broadcaster Assault?

In this sense, Aereo's approach is similar to Sling.  Instead of connecting to your set-top via a very long cord,  this would let you hook your PC to an antenna over a very long cord.  One key difference is that most users of Sling's technology bought it at retail (not sure how many are using Dish-supplied Slingloaded boxes or the new Sling Adapter, but they still have to be a small minority), while Aereo customers will rent access to an antenna in the array.  If push comes to shove, or this distinction is found to be a hinging legal issue,  I wonder if Aereo would change things up a bit and let customers buy these remote antennas outright, then tie in a smaller monthly subscription fee.

But agree that it is a bit ironic that Diller's new play could cause a rift with his old industry. JB

SabrinaChow 12/5/2012 | 5:42:18 PM
re: Can Aereo Survive a Broadcaster Assault?

The establishment is upset because they did not think of this first.  We all have a right to the off-air stuff via antenna.  So what if the antenna is not at my home but at somebody's elses facility with better reception capability?  I still control that antenna.  As Jeff points out, the internet connection in this circumstance is just a really really long cable!

Kudos to those guys at Aereo because this is groundbreaking stuff.  Innovation is a beautiful thing.  The possibilities for the usage of the internet are endless and we'll be shooting ourselves in the foot for oppressing those that create.  I thought we live in a competitive market/capitalistic economy or is it a facade for monopolies?

Jeff Baumgartner 12/5/2012 | 5:42:17 PM
re: Can Aereo Survive a Broadcaster Assault?

Craig Moffett got permission to send along a copy of a column from Steve Effros, a former head of CATA who knows the regulatory landscape backwards and forwards, that appeared in Thursday's CableFAX (my old haunting grounds) that pokes some holes in Aereo's seeming reliance on the Cablevision nDVR case. I think Effros makes a convincing argument, or at least shows that this debate is far from over and demonstrates the sort of stance the broadcasters will likely take when their lawyers descend on Aereo.

He doesn't think the Cablevision network DVR case has the same bearing in this instance. He points out that Cablevision "has already paid the copyright or retransmission content fees to the broadcaster for 'retransmission'." while Aereo has not.  He also makes the case that Aereo is in fact retransmitting those broadcast signals since they're the ones doing the converting and formatting before shipping them along to their paying subscribers.  "That is, quintessentially, a 'retransmission.'" he adds. 

A Slingbox does something like that , too, as we noted. While many Slingboxes are connected to cable set-tops that get service from MSOs that have paid all those retrans fees. But not in all cases. Some Slingbox users who aren't pay-TV customers  can get digital TV over the air and sling those signals along too..with no retrans fees involved. So those two use-cases seem to cancel each other out.  JB

paolo.franzoi 12/5/2012 | 5:42:16 PM
re: Can Aereo Survive a Broadcaster Assault?


So, if somebody just sold a box that was basically a Sling + DVR with Rabbit Ears then this idea would be DOA right?



FinPat 12/5/2012 | 5:42:16 PM
re: Can Aereo Survive a Broadcaster Assault?

First, this is a creative, internet era workaround to a legacy broadcast era rights issue problem. But it is still a loophole / workaround which technically doesn't solve anything but an artificial legal issue. 

Secondly, it would be interesting to know how these antennas are connected to RF and digital processing. I.e. does every subscriber has a virtual multituner set-top-box or is RF+BB processing a shared resource. And how legal spinmeisters are going to interpret this issue. Where to draw the line of "receiver"?



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