The Supreme Court could decide as soon as Friday whether it will hear a case that could reshape the television industry.
ABC, CBS, NBC, Fox, and other TV broadcasters are suing to shutdown an Internet video company called Aereo. The broadcasters warn that if they lose, it could be the end of their industry.
Aereo, which is backed by media mogul Barry Diller, allows customers to watch local TV channels on their computers, tablets, or Internet-connected TVs for a monthly fee. But, unlike cable and satellite providers, Aereo doesn't pay the TV broadcasters for their content.
In a brief filed with the Supreme Court, lawyers for the TV networks asserted that Aereo's business model is "built on the for-profit exploitation of the copyrighted works of others" and that the company "imperils … the viability of over-the-air broadcast television."
Aereo argues that it doesn't need the broadcasters' permission because it uses clusters of tiny antennas to pick up the over-the-air broadcast TV signals and then transmits those channels to its customers over the Internet. Anyone has the right to access broadcast TV with an antenna, although most people watch broadcast channels as part of a package from their cable provider.
The broadcasters say Aereo is trying to create a loophole in copyright law, but Aereo argues it is only making it easier for consumers to access video that should already be free.
The case turns on whether Aereo's service is a "public performance" or whether each antenna and video stream is "private." The U.S. Court of Appeals for the 2nd Circuit has backed Aereo, while federal District Court judges in Washington, D.C., and California have ruled for the broadcasters in cases involving a similar service.
Both sides want the Supreme Court to take up the case. The broadcasters say Aereo is causing them "irreparable harm" as long as it keeps operating, while Aereo fears that if the Supreme Court doesn't hear the case, the company will have to wage costly battles with the broadcasters in Appeals Courts around the country.
The case is about more than just one Internet video company. If Aereo wins, cable and satellite providers may use a similar technique to avoid the billions of dollars they pay every year to offer broadcast TV channels.
"I don't know if Aereo per se is that big of a concern to broadcasters," Dennis Wharton, a spokesman for the National Association of Broadcasters, said. "What's the concern is the precedent that is set of taking content that you don't own, charging a price for it, and keeping all the revenue. That's the revolutionary concept."
News Corp. President Chase Carey threatened last year to yank Fox programming off the air if Aereo wins.
"If we can't have our rights properly protected through legal and political avenues, we will pursue business solutions," Carey said at the time. "One such business solution would be to take the network and turn it into a subscription service."
Steve Effros, a television-industry consultant and a former lobbyist for the cable industry, predicted that if the Supreme Court sides with Aereo, the broadcasters will launch an all-out lobbying push to get Congress to rewrite the law or for the Federal Communications Commission to intervene.
"The copyright law is, of course, written by Congress, so they could change two words and end this thing," Effros said. "There is an importance to what the Supreme Court may decide to do here, but it is an importance with regard to the beginning of a process, not the end of a process."
If cable providers stop paying broadcasters to offer their channels, broadcasters will have only one remaining source of revenue: advertising. But that revenue stream is also under assault from technologies that allow viewers to skip commercials.
The broadcasters have also sued Dish Network over its Hopper service, which lets viewers automatically skip over ads on broadcast channels.
Wharton warned that if new technologies force broadcasters off the air, viewers will lose access to not only quality entertainment, but also a critical information source during disasters.
"Ask the people in New Jersey and New York City [during superstorm Sandy] if broadcasting mattered. When all the cable systems were down, when all the broadband systems were down, when all the cell-phone networks were down, broadcasting was the one technology that survived," he said.
But John Bergmayer, a staff attorney for consumer advocacy group Public Knowledge, argued that public policy shouldn't be distorted to protect the big incumbent players.
"I just can't get over the broadcasters. They get free spectrum that other people don't get, and they're supposed to be offering a free service, but they just can't get out over the fact that there are some people that might want to receive their content with an antenna instead of paying for it," Bergmayer said.