The nation's biggest television companies including ABC, CBS, NBC and Fox are asking the Supreme Court to shut down Aereo Inc., a startup distribution service that they view as a threat to their business.
Launched in 2012 and available in a handful of markets including New York City, Aereo transmits the signals of local broadcast stations to consumers via the Internet. Aereo charges its subscribers between $8 and $12 a month for the service, which includes a small antenna to receive the signals and access to a cloud-based digital video recorder that can hold up to 40 hours of programming.
Because Aereo is not paying the owners of the television stations whose signals it is transmitting, broadcasters are crying foul and claiming copyright theft.
The Supreme Court filing is seeking to overturn a 2-1 decision made earlier this year by the U.S. Court of Appeals for the Second Circuit in New York, which found that Aereo's transmissions and recordings of broadcast content are not "public performances" of copyrighted material. In addition, the court said the broadcasters "have not demonstrated that they are likely to prevail on the merits on this claim in their copyright infringement action."
There's no guarantee the high court will hear the case. If not, broadcasters would likely continue the fight in the lower courts and then try to take another swing with the Supreme Court.
In the Friday filing to the Supreme Court, the broadcasters said the Second Circuit decision "threatens to upend" the television industry" by "blessing a business model that retransmits 'live TV' to paying customers without obtaining any authorization or paying a penny to copyright owners."
Consumers have always had the ability to purchase an antenna to receive over-the-air television signals. However, broadcasters say in their filing that Congress -- in crafting copyright law -- "has been mindful of the potential for third parties to exploit this arrangement by profiting off of the 'retransmission' of broadcast programming -- i.e., by capturing these free broadcasts and retransmitting them to the public for a fee, without the approval of or compensation to those responsible for making these broadcasts available to the public."
An Aereo spokeswoman said in a statement that the company would respond to the filing in "due course."
In its ruling, the Second Circuit said since Aereo subscribers are getting an individual transmission streamed from a digital copy of a broadcaster's programming, it was a private performance.
The broadcasters counter that this is a technological loophole.
"Congress did not want liability to turn on the technical details of a transmission service and did not want the statute rendered obsolete by changes in the technology used to communicate performances to the public," the broadcasters said.
Broadcasters fear that if successful, Aereo could undermine the economics of their business model. Specifically, there are worries that not only will consumers embrace Aereo, but that distributors such as cable and satellite companies will use it or a similar service to avoid paying broadcasters. Broadcasters count on those distribution fees for programming and if Aereo's service catches on, they fear it could severely limit their ability to create and acquire high quality content.
Some broadcasters, including Fox, have even threatened to abandon broadcast television in favor of cable if Aereo and similar services were found to be legal.
Aereo, which won't disclose how many subscribers it has, argues that its service is no different than a pair of rabbit ears on a roof. Its backers include media mogul Barry Diller, who used to run Fox. Earlier this year, Diller said he expected Aereo could eventually have 20 million to 30 million subscribers. He added that the efforts to fight the technology was akin to putting "your hand in front of a train."
New York is not the only place broadcasters have taken on Aereo. In Boston, a group of TV station owners including Hearst Corp. filed suit to stop Aereo from launching there. However, earlier this week the U.S. District Court in Massachusetts rejected a request for a temporary restraining order. Broadcasters are also going after Aereo in Utah as well, where the service recently launched.