Broadcasters to Court: Aereo Will Wreck Us

OVER-THE-TOP MODEL SEEN AS RETRANS THREAT
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WASHINGTON — Broadcasters have told the Supreme Court of their worries that cable operators and other pay TV providers will take a page from over-the-top provider Aereo and bypass retransmission-consent payments unless the high court steps in.

The Big Four broadcast networks and the Public Broadcasting System have asked the court to rule on whether Aereo’s transmission of broadcast-TV station signals over the Internet is considered a public performance subject to copyright payments, or simply — as Aereo asserts — remote, private access to the free over-the-air signals to which viewers are already entitled.

The answer to that question is critical to over-the-air TV’s future, the broadcasters have argued.

In making their case for why the court should review the 2nd U.S. Circuit Court of Appeals’ denial of an injunction, the broadcasters offered up their arguments as to why the lack of a review would cause them major harm, one of the tests for granting a preliminary injunction.

“Certain cable and satellite companies have responded by threatening to use the decision as a road map for re-engineering their own delivery systems so they, too, can retransmit broadcast signals without obtaining the broadcasters’ permission,” the broadcasters told the court, naming some names.

Aereo’s legal justification for its service is that it delivers TV signals via an array of tiny antennas, each of which is dedicated to an individual subscriber, so it isn’t subject to the same retransmission laws as pay TV operators. Also, the service’s DVR feature allocates dedicated storage to each user so as not run afoul of copyright laws, following the legal precedent from the 2nd Circuit’s 2008 decision upholding the Cablevision Systems network DVR product.

Broadcasters pointed out that during this fall’s retransmission- consent impasse between CBS and Time Warner Cable that TWC “threatened to develop its own Aereo-like system to avoid compensating copyright owners and broadcasters for the use of their programming.” They also noted that TWC also encouraged customers blacked out during the impasse to sign up for Aereo to receive the stations.

CABLE SHIFT THREATENED

Broadcasters also issued something of a subtle threat, pointing out that some in their ranks might move their content from free over the air to pay cable if the courts allowed the Aereo model to stand.

The Walt Disney Co., for example, signaled well over a decade ago that it could always move its content to a cable model, though that involved the issue of network compensation.

In April, Twenty-First Century Fox president and chief operating officer Chase Carey, speaking directly of Aereo, threatened to scrap the free-TV model and move to cable. Carey said he valued the affiliate model, but that unless the legal system compelled Aereo and similar services to pay for their signal, “A [different] business solution is the path we’ll pursue if we don’t get our rights protected any other way.”

SOME COVER FOR STATIONS

Broadcasters have some cover in Washington for that move. In the past, lawmakers would have criticized station owners for abandoning the over-the-air audience they had secured free government licenses to serve.

The FCC is encouraging broadcasters to give up spectrum in the major markets populated by network-owned stations and affiliates, and has even suggested cable-only carriage as one option for those who wanted to stay in the video business, just without the spectrum.

It is unclear if broadcasters will succeed in catching the Supreme Court’s ear, given that the lower courts have not yet ruled on the underlying case — the petition is based on the rejection of a preliminary injunction.

But in a separate case involving similar TV-station streaming service FilmOn, the 9th Circuit is considering an appeal of a lower court decision granting an injunction. If the injunction is not overturned by the 9th Circuit, there will be a split in the federal appeals court — one of the reasons why the High Court might step into a case.

Broadcasters’ plea to the Supreme Court included a request that it act with dispatch. “The exceptional importance of the question presented warrants this Court’s resolution now,” they argued.

The court moves at its own pace, though, and probably won’t hear the case until the Spring, so there is unlikely to be any resolution of the legal question about Aereo et al’s legal status until the end of 2014 at the earliest — just about the time broadcasters must decide whether to give up their spectrum to the Federal Communications Commission.

TAKEAWAY

Sensing a retransmission consent threat, TV stations are urging the Supreme Court to rule on over-the-top broadcast-signal provider Aereo.

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