A Supreme Court ruling issued today dashes the hopes of upstart Aereo, and puts wind back in the sails of major TV broadcasters.
Supreme court reversed a lower court decision ruled in favor of Aereo
The Supreme Court reversed a lower court decision that had ruled in favor of Aereo, a service for streaming live network TV on the internet.The court’s 6-3 decision found that Aereo’s service violated the copyrights owned by TV broadcasters and distributors when they streamed network programming.
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Today’s decision, however, was not unanimous. The three dissenting judges said that Aereo was not publicly broadcasting network TV shows and thus did not owe broadcasters any licensing fees.
Aereo founder and chief executive Chet Kanojia was pessimistic about the company if it lost the case. “If there’s no viable business, then we’ll probably go out of business,” he said in an interview a few weeks ago. “I do know the technology we’ve built is tremendously valuable to a lot of people.”
Like a cable provider
In essence, the court ruled that Aereo, which transmits network TV over the Internet to subscribers, was similar to a cable television service, which means it must pay licensing fees to broadcasters. The court did not accept Aereo’s argument that it was just renting a small broadcast antenna to customers, and was therefore not subject to copyright restrictions.
Impact on Internet and cloud storage services
A number of analysts have pointed out that this ruling could be tricky in terms of how it impacts Internet and cloud-storage services. However, given the decision made an effort to clearly differentiate Aereo from other kinds of Internet services, the impact might not be too much, at least until the industry-specific implications become more clear.
Aereo, which is backed by cable pioneer Barry Diller, had relied on a series of prior rulings, including the Supreme Court’s famous 1982 ruling in favor of allowing consumers to tape television broadcasts using Sony’s Betamax recorder.
Broadcaster stocks up
Shares of broadcaster stocks are climbing on today’s news, led by CBS Corporation (NYSE:CBS), up 5%, and Sinclair Broadcast Group Inc (NASDAQ:SBGI) soaring almost 16%. Diversified networks The Walt Disney Company (NYSE:DIS), Twenty-First Century Fox Inc (NASDAQ:FOXA) and Comcast Corporation (NASDAQ:CMCSA) were all on the plus side by around 1%.