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SCOTUS: Broadcasters Win

06/25/2014 11:54 am ET | Updated Aug 25, 2014
AP

In a major win for broadcasters, the Supreme Court ruled 6-3 that Aereo, a streaming service that provides access to programs at about the same time as they are broadcast, violates the Copyright Act of 1976. The decision is a huge blow for Aereo, which may go out of business.

Aereo offers subscribers broadcast television programming over the Internet for a monthly fee of $8 to $12 a month. Its system is made up of servers and thousands of dime-sized antennas stored in a central warehouse. Aereo's technology makes a copy of a program into a subscriber's file, then makes it possible for only that subscriber to view the program on their computer, tablet or smartphone, seconds after the broadcast begins airing.

Aereo owns neither the copyright to the program nor a license to rebroadcast the program. But it argued that it is not transmitting the program, rather the subscriber is transmitting the program. The Court's opinion, written by Justice Stephen G. Breyer, said, "We do not see how the fact that Aereo transmits via personal copies of programs could make a difference. The Act applies to transmissions by means of any device or process." Justices Antonin Scalia, Clarence Thomas and Samuel Alito were in the minority.

Aereo launched in 2012 in its first market, New York. Broadcasters, acting on behalf of their local New York City television stations, filed suit two weeks after the service was announced. A federal judge ruled in Aereo's favor four months later. Then in early 2013, a federal appeals court upheld the lower court's ruling. Subsequently, the broadcasters petitioned the Supreme Court to hear the case. In oral arguments last April the Deputy Solicitor General argued against Aereo on behalf of the government.

Broadcast networks retransmit their programs over stations throughout the country. They derive part of their revenue from commercials. But cable companies pay broadcasters about $3 billion for the right to carry broadcast programming over their systems. Aereo argued that it is not like a cable company because it is renting out antennas and cloud storage to subscribers. Had Aereo's argument been upheld it could have undermined the current broadcast economic model. Then the broadcasters would likely have turned to Congress for help.

Both Aereo's CEO Chet Kanjojia and investor Barry Diller, a prominent media figure, have said in the past that the service would be shut down if they lost in the Supreme Court. A CBS spokesperson reacted to the ruling with a statement, saying, "We are pleased with today's decision, which is great news for content creators and their audiences." Nonetheless, the Court's deliberations underscore the continuing challenges broadcasters face with advances in technology and changes in viewing habits.