Aereo’s rebirth as a cable service is far from a sure thing



Aereo TV Lawsuits

After more than a year of casting itself as the low-cost, online antidote to cable companies, Aereo now wants to be one of them—sort of.

Since losing a high-profile copyright case to the television broadcast industry in June, the now-idle TV streaming service adopted a new strategy Wednesday for re-launching as a cable operator.

But the gambit is far from certain to work, as a federal judge must approve its request, and Aereo would have to negotiate retransmission fees with its hated rivals, the broadcast networks.

“A lot of this will depend on how aggressive, or not aggressive, the broadcasters are willing to be,” said Bruce Ewing, an intellectual property lawyer at Dorsey & Whitney in New York.

Aereo has been off the air since the US Supreme Court ruled the company violated copyrights by grabbing the over-the-air signals of television shows without paying, and then charging subscribers to stream that content to their computers and mobile devices. The court found that Aereo closely resembled a cable service, meaning it could not use broadcasters’ copyrighted material without permission–and presumably payment.

Now because of the Supreme Court’s own characterization, Aereo argued that it deserves a cable operator license. A federal district court in New York that is reviewing other issues related to Aereo’s service will also consider its request for the cable license.

That means Aereo would have to pay royalty fees, which are relatively inexpensive and shouldn’t affect the price of its service, which started at $8 a month; more problematic are so-called retransmission fees, which Aereo would have to negotiate with broadcasters, and could be significantly larger.

“If Aereo is now claiming it’s a cable company, presumably they are now willing to pay retransmission consent fees that every other cable company in the United States pays,” said Dennis Wharton, spokesman for the National Association of Broadcasters, a trade group that includes the companies who sued Aereo.

One Aereo rival is already trying to become licensed as a cable company. California-based FilmOn, which like Aereo captures broadcast TV shows for streaming over the Web in Boston and other cities, filed for a cable license with the US Copyright Office days after the Supreme Court ruled against Aereo in late June.

“The Supreme Court has made a very clear designation of Aereo and FilmOn as cable companies,” FilmOn said in a statement.

Aereo is now also filing the necessary paperwork to operate as a cable provider, according to a letter sent to a federal court judge on Wednesday. The company urged that the request “be decided on an immediate basis or Aereo’s survival as a company will be in jeopardy.”

“Aereo is taking in no new revenue, and continuing to incur enormous costs such as employee salaries, equipment and lease payments, and vendor payments,” the company said in its court filing.

An attempt by a similar streaming service to become a cable operator, however, was struck down in court in 2011 — suggesting Aereo could suffer a similar fate, said Daniel Lyons, an associate professor at Boston College Law School who specializes in telecommunications law.

In the event that Aereo is not eligible for cable status, the firm contended that a portion of its service—a DVR-like feature for recording and storing TV programs for later viewing—is still legal and could be resumed without any need to pay fees.

Past legal precedent around VCR and DVR technologies does suggest that Aereo could legally offer the DVR feature on its own in the future, Lyons said. “The Aereo decision by the Supreme Court seems to leave that intact,” he said.

Aereo declined to answer questions on Thursday.

Though based in New York, Aereo was founded in Boston and has most of its employees based here. Its chief executive, Chet Kanojia, lives in Newton.

Aereo had targeted its service to so-called “cord cutters” who had stopped paying for cable service in favor of cheaper, often online, sources of TV programming. And prior to the Supreme Court’s ruling Kanojia told the Globe in an interview that Aereo explicitly did not want to be viewed as a cable company.

“We have a philosophical problem with the current model. The issue is—and I think we have said from the beginning—we have no interest in recreating the cable business model,” Kanojia said in May. “Because the cable business model isn’t even working for the cable guys anymore. The only reason the cable companies are alive and thriving is because they have Internet.”

Globe staff writer Scott Helman contributed to this report. Image of a child watching television via Shutterstock.

Kyle Alspach has worked in journalism in Massachusetts since 2005 and was one of the original staff writers at BetaBoston.
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