Now comes the expensive part for Aereo: finding out how much it will have to pay broadcasters after the US Supreme Court ruled Wednesday the television streaming service was illegally retransmitting their TV shows.
Attorneys who specialize in copyright cases said the next step in the case will likely have broadcasters back in federal court trying to collect monetary damages, through a trial or by negotiating a settlement with Aereo.
By a 6-to-3 vote, the Supreme Court ruled that Aereo functions enough like a cable TV provider to be subject to the same copyright laws as those companies. Aereo captures broadcast networks’ shows without permission and beams them to its users’ computers and mobile devices for a fee.
It’s possible Aereo may even shut its service before the case goes much farther (update). But it could but still be liable for a payout to broadcasters in subsequent court proceedings, said Bruce Ewing, an intellectual property lawyer at Dorsey & Whitney in New York.
At a minimum, broadcasters will most likely look to recover so-called retransmission fees—the fee cable companies pay to use broadcast content—from Aereo, Ewing said.
The networks could also try to collect fees for purported lost business, attorneys costs, and up to $150,000 for each television episode the service retransmitted.
“With that range of damages, it adds up pretty fast,” Ewing said.
If typical court timelines hold, Aereo will likely first receive an order to halt its service within three to five months, said Harry Cole, a lawyer specializing in broadcast media cases at Fletcher, Heald & Hildreth in the Washington DC area. Then broadcasters would push for damages from Aereo, Cole said.
Attorneys for the individual networks declined to comment or didn’t respond to requests for comment Thursday. Aereo declined to comment.
In a statement Wednesday, the company did not address whether it would seek to stay in business. “We are disappointed in the outcome, but our work is not done,” said Aereo chief executive Chet Kanojia.
The company offers its streaming service in 11 US cities, including Boston. It has not disclosed subscriber numbers.
Aereo could try to stay in business by paying fees to broadcasters.
“If Aereo decides it wants to actually play by the rules, we’d probably be interested in hearing the conversation,” said Dennis Wharton, spokesman for the National Association of Broadcasters, a trade group that includes the companies who sued Aereo.
Cable companies usually pay a per-customer fee to broadcasters. Time Warner Cable disclosed in February that it pays $2.25 per customer to broadcasters; most cable providers have not disclosed their retransmission fees.
However, Aereo would likely have to pay a higher-than-normal fee, said James McQuivey, a consumer media analyst at Forrester Research. That’s because Aereo has little negotiating leverage, due to its small customer base and bad blood with broadcasters, McQuivey said.
He predicted the networks will suggest Aereo pay about $4 a customer.
That would likely force an increase to the standard $8-a-month fee Aereo charges to its users. The company may have to deal with additional complications as well, such as whether the local broadcast affiliates of the television networks have the rights to transmit shows online, said Daniel Lyons, an associate professor at Boston College Law School who specializes in telecommunications law.
With all of its hurdles, Aereo is unlikely to keep its service intact, Lyons said.
“But I don’t think it’s the end of the line for traditional TV over the Internet,” Lyons said. “This is just clarifying what the rules of the road are going to be.”
Aereo has raised nearly $100 million in funding from backers including Highland Capital Partners, a venture firm in Cambridge. The company is based in New York but most of its employees, about 80, work in Boston, where the service was developed. Kanojia lives in Newton.
This article appears on page B7 of the Boston Globe on June 27, 2014, with the headline: Broadcasters likely to hit Aereo for fees.
Kyle Alspach has worked in journalism in Massachusetts since 2005 and was one of the original staff writers at BetaBoston.
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