To the dismay of cord-cutters everywhere, the Supreme Court put the kibosh on Internet television service Aereo.
The court
ruled that Aereo, which transmits broadcast TV channels over the
Internet to its subscribers, was just like a cable television service,
which must pay licensing fees to broadcasters in return for showing
copyrighted programs. Aereo had argued that it merely rented a tiny,
dedicated broadcast antenna to each of its thousands of customers, who
have a right to watch the copyrighted programs, and shouldn’t have to
pay licensing fees.
Stocks of broadcasters, which had sued to shut Aereo down, shot up on the ruling, led by CBS (CBS), which gained 5%, and Sinclair Broadcasting (SBGI) up 16%. More diversified network owners Walt Disney (DIS), Twenty First Century Fox (FOXA) and Comcast (CMCSA) were up about 1%.
A
ruling in favor of Aereo could have upset the current system that
requires cable providers to pay billions of dollars a year to
broadcasters such as CBS and Sinclair. Cable companies could have set up
their own multiple antenna systems, mimicking Aereo, for example.
The
tricky part of the ruling will be how it impacts Internet and
cloud-storage services. The court went out of its way in attempt to
differentiate Aereo from other kinds of Internet services, but just how
successfully it managed the task won’t be clear immediately.
"We
agree that Congress, while intending the Transmit Clause to apply
broadly to cable companies and their equivalents, did not intend to
discourage or to control the emergence or use of different kinds of
technologies," Breyer wrote in the court's majority decision. "But we do
not believe that our limited holding today will have that effect."
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. A lower court later upheld the use of digital video
recorders, even if the recording was done at a central location by a
cable provider.
Aereo founder and CEO Chet Kanojia has said the service may be dead if it lost the case.
"If there's no viable business, then we'll probably go out of business,” he told Yahoo Global News Anchor Katie Couric. "I do know the technology we've built is tremendously valuable to a lot of people."
The decision was not unanimous. Three conservative justices led by Antonin Scalia wrote in a dissent that Aereo was not performing a public broadcast of TV shows and thus did not owe broadcasters any licensing fees.
"The court vows that its ruling will not affect
cloud-storage providers and cable television systems...but it cannot
deliver on that promise given the imprecision of its results-driven
rule," Scalia wrote."If there's no viable business, then we'll probably go out of business,” he told Yahoo Global News Anchor Katie Couric. "I do know the technology we've built is tremendously valuable to a lot of people."
The decision was not unanimous. Three conservative justices led by Antonin Scalia wrote in a dissent that Aereo was not performing a public broadcast of TV shows and thus did not owe broadcasters any licensing fees.
After the ruling came out, Kanojia endorsed Scalia's view. "Today’s decision by the United States Supreme Court is a massive setback for the American consumer," he said in a blog post. "We’ve said all along that we worked diligently to create a technology that complies with the law, but today’s decision clearly states that how the technology works does not matter."
The
service was available in almost a dozen major cities, including Boston,
Dallas and Atlanta. Customers paid $8 a month to access all the local
television channels in their city plus a few additional networks. LINK
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