Supreme Court Kills TV Service Aereo

The justices side with TV broadcasters in a 6-3 decision.

Aereo allows subscribers to watch local TV channels on their tablets, phones, and computers. 
National Journal
June 25, 2014, 6:19 a.m.

The Su­preme Court de­clared Wed­nes­day that In­ter­net video ser­vice Aereo is il­leg­al.

The 6-3 de­cision is a huge win for the TV net­works, who feared that Aereo could des­troy their busi­ness mod­el.

Writ­ing for the ma­jor­ity, Justice Steph­en Brey­er con­cluded that the “pur­pose” of copy­right law makes it clear that Aereo’s ser­vice is a “pub­lic per­form­ance,” and the com­pany there­fore needs per­mis­sion for TV con­tent.

Aereo al­lows sub­scribers to watch and re­cord loc­al TV chan­nels on their com­puters, tab­lets, phones, and In­ter­net-con­nec­ted TVs for as little as $8 per month. The prob­lem is that un­like cable pro­viders, Aereo doesn’t pay the TV sta­tions for their con­tent.

Every­one has the right to ac­cess over-the-air TV chan­nels us­ing an an­tenna. Aereo calls it­self a “mod­ern-day tele­vi­sion an­tenna and DVR.” But Aereo sub­scribers don’t have an­tenna arms stick­ing out of their tab­let com­puters. In­stead, Aereo uses a cluster of thou­sands of tiny an­ten­nas to de­liv­er video over the In­ter­net to all of the sub­scribers in an area. Tech­nic­ally, sub­scribers are rent­ing ac­cess to one of those an­ten­nas.

But the court didn’t buy Aereo’s de­scrip­tion of it­self. Brey­er wrote that the his­tory of copy­right law “makes clear that Aereo is not simply an equip­ment pro­vider,” and is ac­tu­ally “sub­stan­tially sim­il­ar” to a cable TV ser­vice. There­fore, Aereo should have to pay re­trans­mis­sion fees just like cable pro­viders do, the court ruled.

The court ac­know­ledged that Aereo only ac­tiv­ates an an­tenna based on a re­quest from an in­di­vidu­al user, but said the com­pany it­self is still in­fringing on copy­right. The tech­no­lo­gic­al dis­tinc­tion makes no dif­fer­ence to either users or TV broad­casters, the court con­cluded.

“Giv­en Aereo’s over­whelm­ing like­ness to the cable com­pan­ies tar­geted by [copy­right law], this sole tech­no­lo­gic­al dif­fer­ence between Aereo and tra­di­tion­al cable com­pan­ies does not make a crit­ic­al dif­fer­ence here,” the ma­jor­ity wrote.

Barry Diller, a me­dia mogul and primary in­vestor in Aereo, has said re­peatedly that the ser­vice would shut down if it lost at the high court. 

Aereo CEO Chet Kan­ojia said the de­cision is a “massive set­back for the Amer­ic­an con­sumer.” But he said the com­pany’s “work is not done,” and “we will con­tin­ue to fight for our con­sumers and fight to cre­ate in­nov­at­ive tech­no­lo­gies that have a mean­ing­ful and pos­it­ive im­pact on our world.”

Justice Ant­on­in Scalia wrote the dis­sent, which was joined by Justices Clar­ence Thomas and Samuel Alito. The con­ser­vat­ive justices ar­gued that the court should fo­cus on the plain read­ing of copy­right law and not try to ex­pand it to meet Con­gress’s in­tent.

“It is not the role of this Court to identi­fy and plug loop­holes,” they wrote. “It is the role of good law­yers to identi­fy and ex­ploit them, and the role of Con­gress to elim­in­ate them if it wishes.”

The In­ter­net in­dustry has been track­ing the Aereo case nervously, fear­ing that a broad rul­ing against the video start-up could en­danger oth­er cloud stor­age pro­viders. Like Aereo, com­pan­ies in­clud­ing Google, Amazon, Apple, and Drop­box al­low users to re­motely ac­cess copy­righted ma­ter­i­al.

The court tried to craft a nar­row rul­ing, say­ing it was not ad­dress­ing all re­mote stor­age of con­tent.

But the dis­sent­ers ar­gued the rul­ing will “sow con­fu­sion for years to come,” as courts try to sort out which ser­vices are le­git­im­ate and which too closely re­semble Aereo.

The TV broad­casters had feared that an Aereo win could doom their whole in­dustry by elim­in­at­ing the roughly $3.3 bil­lion they pull in every year in pay­ments from cable TV pro­viders. If the court had up­held Aereo, the cable pro­viders could have cut off those pay­ments either by en­ter­ing in­to agree­ments with Aereo or mim­ick­ing the com­pany’s tech­no­logy.

In a state­ment, Na­tion­al As­so­ci­ation of Broad­casters CEO Gor­don Smith said TV sta­tions “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,” Smith said.

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