July 7, 2010 file photo shows Barry Diller at the annual
Allen & Co. Media summit in Sun Valley, Idaho. Thirty
years after failing to persuade the Supreme Court of the
threat posed by home video recordings, big media companies
are back at the high court to try to rein in another
technological innovation that they say threatens their
Thirty years after failing to convince the Supreme Court of the
threat posed by home video recordings, big media companies are
back and now trying to rein in another technological innovation
they say threatens their financial well-being.
The battle has
moved out of viewers' living rooms, where Americans once marveled
at their ability to pop a cassette into a recorder and capture
their favorite programs or the sporting event they wouldn't be
home to see.
entertainment conglomerates that own U.S. television networks are
waging a legal fight, culminating in Tuesday's Supreme Court
argument against a startup business that uses Internet-based
technology to give subscribers the ability to watch programs
anywhere they can take portable devices.
The source of the
companies' worry is Aereo Inc., which takes free television
signals from the airwaves and sends them over the Internet to
paying subscribers in 11 cities. Aereo, backed by billionaire
Barry Diller, has plans to more than double that total.
including ABC, CBS, Fox, NBC and PBS have sued Aereo for copyright
infringement, saying Aereo should pay for redistributing the
programming the same way cable and satellite systems do.
The U.S. networks
increasingly are reliant on these retransmission fees, estimated
at $3.3 billion last year and going up to more than $7 billion by
2018, according to research by SNL Kagan, which analyzes media and
communications trends. They fear that they will lose some of that
money if the Supreme Court rules for Aereo.
starts at $8 a month and is available in New York, Boston, Houston
and Atlanta, among others. Subscribers get about two dozen local
over-the-air stations, plus the Bloomberg TV financial channel.
In the New York
market, Aereo has a data center in Brooklyn with thousands of
dime-size antennas. When a subscriber wants to watch a show live
or record it, the company temporarily assigns him an antenna and
transmits the program over the Internet to the subscriber's
laptop, tablet, smartphone or other device.
The antenna is
only used by one subscriber at a time, and Aereo says that's much
like the situation at home, where a viewer uses a personal antenna
to watch over-the-air broadcasts for free.
"Aereo is in
some ways novel, but it is also among a host of technologies that
uses the Internet to offer consumers the ability to do what they
always have more cheaply and conveniently," the Dish Network
and Echostar Technologies said in a supporting legal brief filed
in the Supreme Court.
broadcasters and their backers argue that Aereo's competitive
advantage lies not in its product, but in avoiding paying for it.
simply a blatant free rider trying to make a quick buck without
paying anything toward the true costs of what it
misappropriates," Time Warner Inc. said in a court filing.
told the court that Aereo's "competitors pay for the rights
to retransmit 'live TV' to the public — as they must to avoid
liability for copyright infringement — while Aereo does
appeals court in New York ruled that Aereo did not violate the
copyrights of broadcasters with its service, but a similar service
has been blocked by judges in Los Angeles and Washington, D.C.
The 2nd U.S.
Circuit Court of Appeals said its ruling stemmed from a 2008
decision in which it held that Cablevision Systems Corp. could
offer a remote digital video recording service without paying
additional licensing fees to broadcasters because each playback
transmission was made to a single subscriber using a single unique
copy produced by that subscriber. The Supreme Court declined to
hear the appeal from movie studios, TV networks and cable TV
In the Aereo
case, a dissenting judge said his court's decision would
eviscerate copyright law.
Judge Denny Chin
called Aereo's setup a sham and said the individual antennas are a
"Rube Goldberg-like contrivance" — an overly
complicated device that accomplishes a simple task in a confusing
way — that exists for the sole purpose of evading copyright law.
administration, artists, actors, Major League Baseball and the
National Football League all support the broadcasters. But the
administration and computer software and telecommunications groups
are urging the court to avoid a broad ruling in favor of copyright
protection that could call into question the rapidly evolving
world of cloud computing, which gives users access to a vast
online computer network that stores and processes information.
companies, independent broadcasters and consumer groups are
FM radio and
cable TV were initially derided as unnecessary, inefficient or
just bizarre, said the digital civil liberties watchdog Electronic
Frontier Foundation. In a legal filing joined by other public
interest groups and the consumer electronics trade association,
the group said the justices should not become regulators of
technology and "the court should not attempt to predict the
future of television."
industry has changed dramatically since the high court ruled in
favor of home video recording in 1984 in a 5-4 decision. Then,
Sony was the maker of the Betamax recorder and Universal City
Studios and Walt Disney Productions were arguing for protection
under copyright law.
Now, Disney owns
ABC and cable giant Comcast owns NBC and Universal.
The case is ABC
v. Aereo, 13-461.