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Supreme Court Will Hear Aereo Case As Streaming Debate Rages On

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By Lawrence Hurley

WASHINGTON (Reuters) - The U.S. Supreme Court on Friday agreed to hear a closely watched appeal filed by the four major broadcasters against an online television service, Aereo Inc, backed by media mogul Barry Diller that they claim steals copyright TV content.

Walt Disney Co's ABC network, CBS Broadcasting Inc, Comcast Corp's NBCUniversal and Twenty-First Century Fox Inc appealed a decision by the 2nd U.S. Circuit Court of Appeals in April that denied their request to shut Aereo down while litigation moves forward.

Aereo, backed by Diller's IAC/InterActiveCorp, charges users a low monthly fee to watch live or recorded broadcast TV channels on computers or mobile devices. Aereo does not pay the broadcasters.

In a relatively unusual step, Aereo urged the high court to hear the case even though it won in the lower court because it would like a definitive answer on the issue.

The Supreme Court said in a brief order issued on the case on Friday that Justice Samuel Alito will not participate in it. The court generally does not disclose why justices are recused.

A ruling is expected by the end of June.

Aereo subscribers can stream live broadcasts of TV channels on mobile devices using miniature antennas, each assigned to one subscriber. The service was launched in March 2012 in the New York area. The company has since expanded to about 10 cities and plans to enter several more.

The broadcasters claim the service violates their copyrights on the television programs and represents a threat to their ability to control subscription fees and generate advertising.

Among those filing court papers in support of the broadcasts are the National Football League, Major League Baseball and various media companies, including Metro-Goldwyn-Mayer Studios Inc.

CBS said in a statement on Friday that Aereo's business model is "built on stealing the creative content of others."

Aereo counters that its service does nothing more than provide users what they could obtain with a personal television antenna.

"We believe that consumers have a right to use an antenna to access over-the-air television and to make personal recordings of those broadcasts," Aereo Chief Executive Officer Chet Kanojia said in a statement.

'PERSUASIVE GROUNDS'

The case is closely watched throughout the television industry. Cablevision Systems Corp, for example, has said the legal theory advanced by broadcasters to the high court would spell trouble for cloud-based content services and threaten Cablevision's ability to offer DVR recording to its customers.

Cablevision is the fifth-largest U.S. cable provider and sold video services to 2.8 million subscribers as of Sept 30, 2013.

"Cablevision remains confident that while the Aereo service violates copyright, the Supreme Court will find persuasive grounds for invalidating Aereo without relying on the broadcasters' overreaching - and wrong - copyright arguments that challenge the legal underpinning of all cloud-based services," the company said in a statement.

Several lawsuits pitting Aereo against television providers are playing out across the United States, including in federal courts in New York, Massachusetts and Utah. The Supreme Court appeal stems from the New York litigation.

While the broadcasters have not had success so far against Aereo, they did persuade a California federal court to force Aereo competitor FilmOn X to shut down while a lawsuit there goes forward.

A district court judge in Washington also ruled in September that FilmOn X must cease to operate everywhere in the country while the lawsuit brought by broadcasters there moves forward.

Gordon Smith, president of the National Association of Broadcasters, welcomed the Supreme Court's intervention.

"Enshrined in the Constitution is the concept that content creators deserve to be protected from product theft," he said in a statement. We look forward to the resolution of this case."

The case is American Broadcasting Companies Inc, et al, v. Aereo Inc, U.S. Supreme Court, 13-461.

(Reporting by Lawrence Hurley; Additional reporting by Jennifer Saba and Liana Baker; Editing by Will Dunham)

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