Major U.S. television broadcasters have failed to persuade an appeals court to shut down Aereo, an online TV service that they claim violates their copyrights.
Antennas intercept television signals and send them to internet-connected devices. Photo: Virginia Star
The broadcast networks sued Aereo in March 2012, claiming that it infringed copyrights by capturing their over-the-air signals and retransmitting the programming to subscribers on computers and smartphones.
Aereo allows subscribers to view live as well as time-shifted streams of over-the-air television on Internet-connected devices. It is similar to a service called TV Now that was offered by Australian mobile carrier Optus.
TV Now was shut down within a year following legal action by sports organisations arguing Optus’ product infringed on their exclusive digital broadcast rights, which had been sold to Optus’ competitor Telstra. The Federal Court in New South Wales found TV Now did breach Australia’s copyright laws.
The decision highlighted the difficulty of applying exisiting copyright legislation to the internet-era.
Vice president of corporate and regulatory affairs at Optus, David Epstein, said Optus has always maintained a technology neutral policy is in the best interests of the consumer.
“It is clear that this is the direction most international jurisdictions are taking,” he said.
In the US, broadcasters argued Aereo would devalue their programming and cut viewership, jeopardising revenue from advertisers and retransmission payments from pay-TV providers. Aereo’s transmissions are public performances and require licenses, they said.
“Its transmissions are not public performances,” the judges said in a split decision. “If they are not public performances, it needs no such license.”
With the appeal ruling, Aereo can go ahead with a planned national expansion of its service from its base in New York, Aereo’s backer Barry Diller said in an e-mail.
Mr Diller is a former chairman and chief executive of Paramount Pictures and Fox Broadcasting.
U.S. District Judge Alison Nathan denied the networks an injunction in July, ruling that Aereo’s retransmissions weren’t public performances.
Broadcasters receive retransmission payments from pay-TV providers to transmit broadcast signals and programming to subscribers, and that source of revenue could be jeopardised if many viewers choose to watch shows on Aereo.
“With Aereo prepping a major U.S. expansion, we believe investors should be increasingly concerned with the sustainability of broadcasters’ retrans gravy train,” Richard Greenfield, a New York-based analyst at BTIG, said in a report last month. “It may be about to hit a wall.”
Aereo said that its service gives subscribers access to broadcast programming and lets them record it using remotely located individual antennas and digital video recorders for playback later. That constitutes a private performance under copyright law, the company said.
The appeals court agreed, comparing Aereo’s remote digital antennas to the rooftop antenna that captures broadcast signals and transmits them to the TV in the house.
“Each user-associated copy of a program created by Aereo’s system is generated from a unique antenna assigned only to the user who required that the copy be made,” Circuit Judge Christopher Droney wrote in his decision.
“The potential audience of each of Aereo’s transmissions was the single user to whom each antenna was assigned.”
The service began in March 2012, offering New York City subscribers access to broadcasts for $US12 a month. After the injunction was denied by Nathan, the company announced plans to expand to other cities. In February, Aereo said it was providing service to counties in New York state, New Jersey, Connecticut and Pennsylvania. Membership plans start at $8 a month.
“We always thought our Aereo platform was permissible and I’m glad the court has denied the injunction — now, we’ll build out the rest of the U.S.,” Diller said in an e-mail.
Other plaintiffs in the Aereo case include News Corp.’s Fox, CBS Corp., WNET and the Public Broadcasting Service.