Business

Boston-based digital TV service Aereo files for bankruptcy

Aereo’s Chet Kanojia detailed the bankruptcy in a letter Friday.

Bebeto Matthews/Associated Press/File 2012

Aereo’s Chet Kanojia detailed the bankruptcy in a letter Friday.

A year ago, Aereo was the future of television. Today, the future is bleak for the Boston-based tech startup.

The company has been on a downward spiral since its digital recording and streaming service was found to violate copyright law by the US Supreme Court in June. Earlier in November, Aereo closed its Boston office and laid off 43 of its local staff. Late Thursday, facing lawsuits from two dozen television companies, it declared bankruptcy.

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In a letter posted on the company website, Aereo chief executive Chet Kanojia said the move would avoid “the extensive cost and distraction of defending drawn out litigation in several courts.”

Bankruptcy “essentially freezes all existing lawsuits against the company,” said Bruce Ewing, a New York intellectual property lawyer who has followed the case. “It may be that Aereo is hoping to somehow go through the bankruptcy process and emerge on the other end free of any liabilities to the broadcasters. Whether or not that is possible is unknowable at this point.”

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According to its Chapter 11 bankruptcy filing in the US District Court in Manhattan, the tech company could either wait for regulatory changes to make its business model viable or opt to sell “all or substantially all of its assets,” including intellectual property such as technology patents and software designs.

Four Aereo investors either declined or did not reply to requests for comment, and the company declined to comment on its future plans beyond Kanojia’s public letter. However, in its bankruptcy filing, Aereo said it “has also been formulating new legal strategies and potential new business models consistent with the Supreme Court’s decision.” It added that actions by federal regulators may give it a legal way to use its technology but said the timing of those actions was “ultimately uncertain.”

Dan Rayburn, an online video industry analyst, said he was skeptical Aereo could attract new investors because its subscriber base was relatively small. He also doubted the company could make much selling its intellectual property.

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“I don’t think it’s worth a lot, if anything,” Rayburn said. “What technology did they have? They had small antennas that pick up over-the-air signals.”

The company, which gave subscribers the ability to watch broadcast television on their computers or mobile devices and record and store programs in the cloud, had been entangled in litigation for years. TV networks and cable companies argued that Aereo stole the same programming that cable networks had to pay for. Despite some early legal victories, the Supreme Court rejected Aereo’s defense in a 6-to-3 ruling.

The company suspended its service three days after the Supreme Court ruling and issued refunds to its customers in a dozen metropolitan areas, including Boston. At the end of 2013, the company had around 80,000 subscribers, who paid $8 to $12 a month to stream over-the-air programming from the major broadcast networks to their devices.

Aereo said in its bankruptcy filings that it has appointed Lawton Bloom of Argus Management Corp. in New York as its “chief restructuring officer.”

Kanojia is the largest single shareholder in Aereo, according to the bankruptcy filing. His stake amounts to 42.3 percent of the company.

Related coverage:

Aereo ending operations, laying off 43 in Boston

Innovation Economy: Decision in Aereo case won’t stop tech disruptors

Aereo’s use of TV fare found to break copyright law

Aereo has few options for a Plan B, but now it needs one

Supreme Court expresses skepticism on Aereo

Archive: Aereo wants a TV revolution, if the Supreme Court will let it

Jack Newsham can be reached at jack.newsham@globe.com. Follow him on Twitter @TheNewsHam.
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