Big broadcasters vanquish upstart Indian origin Chet Kanojia's Aereo at US Supreme Court

Jun 26 2014, 12:30 IST
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Aereo CEO and Founder Chet Kanojia departs the U.S. Supreme Court in Washington. (Reuters) Aereo CEO and Founder Chet Kanojia departs the U.S. Supreme Court in Washington. (Reuters)
SummaryDecision may make it harder for Internet rivals to provide alternative at cut-rate prices.

Broadcast and cable TV are not dead yet - despite Indian origin Chet Kanojia's, Aereo chief executive's best efforts.

In a decision that could crimp consumers' hopes to cut the cord from their cable operators, the US Supreme Court said Aereo Inc, a video streaming service backed by media mogul Barry Diller, violated copyright law by using tiny antennas to broadcast TV content online to paying subscribers.

Wednesday's 6-3 decision is a victory for traditional network operators such as CBS Corp, NBC parent Comcast Corp, ABC parent Walt Disney Co and Twenty-First Century Fox Inc.

It may also make it harder for Internet rivals to provide alternative, a la carte programming at cut-rate prices.

"As convenient and as fun as it is for the consumer, an adverse decision would have completely changed the business model of Hollywood and of movies and TV," said Roger Entner, a telecommunications analyst at Recon Analytics LLC in Boston.

Wednesday's decision casts the Internet company's immediate future into doubt. Started in 2012 and backed by Diller's IAC/InterActiveCorp, Aereo typically costs about $8 to $12 a month, and lets users stream live broadcasts on mobile devices. Aereo does not pay the broadcasters.

For the networks, the victory protects the estimated $3 billion in so-called retransmission fees that broadcasters get from cable and satellite TV systems.

The decision could also raise concern for other technologies, such as cloud computing, that innovation would be stifled by making it too easy to deem use of certain content as theft. The majority in the Supreme Court decision played down the issue and indicated it would wait for a case that specifically addresses copyright law in other technologies.

Chet Kanojia, Aereo's chief executive, called the decision "a massive setback" for American consumers.

"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," he said in a statement. "We are disappointed in the outcome, but our work is not done."

Diller, in an emailed statement, said: "It's not a big (financial) loss for us, but I do believe blocking this technology is a big loss for consumers." Diller is worth about $2.5 billion, Forbes magazine said on Wednesday.

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Writing for the majority, Justice Stephen Breyer said Aereo is "not simply an equipment provider," but rather bears an "overwhelming likeness" to cable TV companies whose ability to retransmit broadcasts was limited under a 1976 copyright

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