Aereo loses in Supreme Court, Barry Diller says “it’s over now”

Posted Jun 25, 2014

The Supreme Court of the United States issued a ruling in the legal tussle between streaming TV service Aereo and major network broadcasters. The Supreme Court ruled that the decision of the second circuit, which upheld that Aereo was within the bounds of the Copyright Act, will be reversed. The decision was voted 6-3.

Aereo said that if the Supreme Court ruled against them, then the company was through. Aereo received around $100 million in funding over the last few years so this is a large loss for its investors.

“The essence of the Aereo ruling is that Aereo is equivalent to a cable company, not merely an equipment provider,” said a Supreme Court blog post.

Aereo has a technological different from other cable companies. Its technology remains inert unless a user tunes it instead of constantly streaming. This single technological differentiation is not enough to call Aereo’s service as private performance instead of public.

This case centers around the Transmit Clause and is based on whether or not Aereo’s service is public or private.

Aereo has two products — one is a mini-antenna in several cities that are based in Aereo server farms that are rented by users as part of a monthly fee. The other product is a DVR / cloud storage service that holds the recorded shows. Aereo transcodes all of the content  for use on the Internet. Aereo users can receive around 30 channels in a live format. The service never actually offered real live TV, but users could record and transcode the content instantly to watch in near real-time.

Network broadcasters send their own signals for free, but they make a good portion of its revenue from cable package deals. Since users view Aereo content live and many view the content at the same time, broadcasters believe that Aereo’s signal should be considered “public.”

In an interview with CNBC, Aereo investor Barry Diller said “We did try, but it’s over now.”

Broadcasters are expected to collect $7.1 billion in retransmission fees in 2018, which is up from $3.3 billion last year.