Is this the end for Aereo?

Supreme Court has ruled that Aereo is just like cable, so it can't rebroadcast TV without paying

Published: June 25, 2014 03:15 PM

If you're a subscriber—or even just a fan—of Aereo's TV-over-the-Internet service, you're probably wondering whether today's Supreme Court ruling against the company spells its demise. While the ruling is a resounding defeat for the company, Aereo does have a few options. Still, it's clear that the service as we now know it has come to an end.

To recap: Aereo's service provided over-the-air TV, delivered via the Internet, and a cloud-based DVR for recording shows. A basic package cost $8 a month; one with more recording space, $12. Each subscriber leased a small dime-sized antenna housed by the company, so Aereo claimed that it was really in the antenna-renting business and thus didn't have to pay retransmission fees like a cable company. Broadcasters claimed Aereo was rebroadcasting programs without paying for them, which violated their copyrights.

In a 6-3 decision against Aereo, the Supreme Court affirmed the broadcasters' claims, saying that Aereo acted like a cable company and therefore violated broadcasters' copyrights on their programming. The decision effectively ends the company's service as it is currently configured. The media mogul Barry Diller, a major Aereo backer, appeared to acknowledge as much when he commented to CNBC, "We did try, but it's over now." Previously, the Aereo founder and CEO Chet Kanojia had said a ruling against it would probably mean the end of the company, adding that there was no immediate backup plan.

But in a statement today on the Aereo blog, he seemed a bit less definitive. “We are disappointed in the outcome, but our work is not done," he wrote. "We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.”

The company hasn't yet announced its immediate plans going forward, such as when the service will be shuttered and whether customers will be able to get a refund. While the current Aereo service is pretty much a goner, it's not quite clear whether the decision means an end for Aereo itself. The company has raised a significant amount of investment money—about $100 million—and it has developed technology and experience capturing and storing TV signals that could be of use to other companies in the TV industry, including cable companies.

Another option would be to continue its service but start paying broadcasters retransmission fees, just like a cable company. But that would greatly increase its costs, and presumably the amount it would have to charge its subscribers.

A third option would be to lobby Congress to change the copyright act, especially if it could build a groundswell of grassroots consumer support for the service, though that's clearly an uphill battle.

Consumer Reports, like some other public-interest groups, had publicly supported Aereo's service. “We’re disappointed that the Supreme Court has ruled to make it harder for consumers to access and watch broadcast television when and where they want," said Ellen Bloom, Senior Director of Federal Policy for Consumers Union, the policy and advocacy arm of Consumer Reports. “We think Aereo was on to something by filling a need for low-cost, flexible viewing options. As cable prices keep skyrocketing, the consumer demand will continue to grow for more personalized, affordable ways to watch television."

We've reached out to Aereo to get more information about its immediate—and longer-term—plans, but the company has so far provided only the statement posted on its blog. We'll continue to follow up with the company as more details are announced.

—James K. Willcox

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