WASHINGTON — The Supreme Court agreed Friday to resolve a dispute between television broadcasters and Aereo, an Internet startup that the broadcasters say threatens the economic viability of their businesses.
Aereo uses an array of small antennas to stream over-the-air television signals to subscribers, allowing them to watch programs on their smartphones and computers. The broadcasters say this amounts to theft of their content and violates copyright laws. Aereo responds that it is merely helping its subscribers do what they could lawfully do since the era of rabbit-ear antennas: watch free broadcast television delivered over public airwaves.
The case could have broad implications for the way content is distributed in the future. The major television networks have said their business would be undermined by services that retransmit their signals without paying fees, as cable and satellite companies do.
The case, American Broadcasting Companies v. Aereo Inc., No. 13-461, was brought by major networks and local stations. They say Aereo’s service runs afoul of a part of the copyright law that requires copyright owners’ permission for “public performances” of their work. The law defines such performances to include retransmission to the public.
Aereo says its service is not covered by the provision, a position that the petitioners called nonsensical.
“For example, when tens of thousands of Aereo subscribers all simultaneously watch the same broadcast of the Super Bowl using Aereo, Aereo is not publicly performing the Super Bowl,” the petition said, mocking Aereo’s argument. “It is merely making tens of thousands of simultaneous ‘private’ performances to its subscribers.”
A divided three-judge panel of the federal appeals court in New York ruled in April for Aereo. In dissent, Judge Denny Chin wrote that the service was “a Rube Goldberg-like contrivance, overengineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.”
Aereo, which is backed by Barry Diller, the chairman of the media conglomerate IAC/InterActiveCorp, joined the petitioners in urging the Supreme Court to hear the case even though it had prevailed in the appeals court. Aereo said it had sought a final resolution of the lawfulness of its service in the face of what it called a legal “war of attrition” waged by broadcasters in courts around the nation.
Its service, Aereo said, merely sought to make good on the original deal between broadcasters and the government.
“The essential bargain that petitioners made to obtain, for free, public spectrum worth billions of dollars was that, once they have broadcast their programming, consumers have a right to receive and to view that programming using an antenna and to copy that programming for their personal use,” Aereo’s brief said.
In a statement, the company’s chief executive and founder, Chet Kanojia, said, “We said from the beginning that it was our hope that this case would be decided on the merits.”
He added that the company had “every confidence that the court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna, make a personal recording with a DVR and watch that recording on a device of their choice.”
Because it assigns individual antennas to every viewer, Aereo contended that its Internet streams were not public performances under the copyright law. That means, it argued, that it has no obligation to pay retransmission consent fees to local stations.
Cable and satellite companies pay such fees, which supplement advertising revenue for local stations and their network partners. The broadcasters told the justices that their businesses were threatened not only by Aereo but also by the prospect that cable and satellite companies would use a ruling in its favor “as a road map for re-engineering their own delivery systems so they too can retransmit broadcast signals without obtaining the broadcasters’ permission.”
At a conference of broadcasters last spring, Chase Carey, the president and chief operating officer of 21st Century Fox, said that networks might consider removing their signals from the air if services like Aereo cut into retransmission fees.
“We won’t just sit idle and allow our content to be actively stolen,” Carey said in April. “It is clear that the broadcast business needs a dual revenue stream from both ad and subscription to be viable.” He said that “one option could be converting the Fox broadcast network to a pay channel.’’
Critics dismissed his comments as an idle threat intended to influence the courts and possibly policy makers as well.
The Supreme Court’s order in the case noted that Justice Samuel A. Alito Jr. had recused himself.