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Why Broadcasters Might Want to Reframe How They Look at Aereo

aereoIn a recent article, Time writes that Aereo’s spectacular failure actually exposed the broadcasting industry’s vulnerability: retransmission fees.

According to Time, which should know a thing or two about being disrupted, the winning side should buy up what Aereo was selling: inexpensively delivering content to consumers where they want, when they want it. Because, as the article warns, the day will soon come when consumers will stop paying high subscription fees to watch channels they don’t want.

What I have trouble moving past is that Aereo wasn’t really charging for content, as everything you could watch on the service was free anyway. It was charging for convenience — You could watch Aereo on a laptop or iPhone, and it gave customers access to a cloud-based DVR to store their favorite shows. It also made up for the fact that, here in building-packed New York City at least, the free, over-the-air broadcasts are often difficult to watch with a regular TV aerial. Most of the people I know who used Aereo here did so because they couldn’t get reliable signals from the broadcasters. In this sense, Aereo addressed a technical failure, too. With those factors combined, Aereo was certainly worth eight bucks a month.

The broadcast networks used the courts to pummel Aereo into submission, suing a potential industry disruptor out of existence. But instead of walking away smiling, those broadcasters should realize Aereo only foreshadowed a massive industry shakeup that will change everything about television. As more people cut the cord and switch to on-demand services like Netflix and HBO Go (with the latter soon to be available without a cable subscription), cable television will slowly die out — and take those lucrative retransmission fees with them as it goes. CBS, at least, sees the writing on the door: It’s launching an innovative subscription-based online service, from which it’ll likely make money off ads, too. More broadcasters should realize that cable TV is the past, not the future. And what better, bolder move to make than buying Aereo?

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Aereo Files for Bankruptcy

aereo antennaeWith a post on the company’s blog Friday morning, Aereo founder and CEO Chet Kanojia announced the company had filed for bankruptcy protection:

The enthusiasm we encountered was overwhelming. The sense of frustration consumers expressed reinforced our mission. We knew we had touched a nerve, had created something special, and had a built something meaningful for consumers.

But we encountered significant challenges from the incumbent media companies.

While we had significant victories in the federal district courts in New York and Boston and the Second Circuit Court of Appeals, the reversal of the Second Circuit decision in June by the U.S. Supreme Court has proven difficult to overcome. The U.S. Supreme Court decision effectively changed the laws that had governed Aereo’s technology, creating regulatory and legal uncertainty. And while our team has focused its energies on exploring every path forward available to us, without that clarity, the challenges have proven too difficult to overcome.

Accordingly, today, we filed for Chapter 11 reorganization proceedings. We also appointed Lawton Bloom of Argus to serve as Aereo’s Chief Restructuring Officer during this period.

Some of the challenges from “incumbent media companies” included local television stations, who sued Aereo for copyright infringement.

Is This the End of Aereo?

aereo_304The internet streaming service that came close to disrupting broadcasting and cable TV as we know it, now says it is laying off most of its staff.

Aereo spokesperson Virginia Lam told BostInno.com in an email, “In an effort to reduce costs, we made the difficult decision to lay off some of our staff in Boston and New York. We are continuing to conserve resources while we chart our path forward. We are grateful to our employees for their loyalty, hard work and dedication. This was a difficult, but necessary step in order to preserve the company.”

The TV-on-the-Web startup plans to cut the 43 Boston jobs and close down as of Nov. 12, according to the letter. Laid-off employees will receive “a modest severance,” CEO Chet Kanojia said in the letter to employees.

The shutdown comes after Aereo’s loss to broadcasters in the Supreme Court in June and repeated, but failed, attempts to relaunch its online streaming TV service in the following months. Its service has been off the air since shortly after the Supreme Court ruling, meaning Aereo hasn’t had a revenue stream for months.

In a June, the US Supreme Court ruled against the internet streaming service, siding with broadcasters who thought the service violated copyright laws.

Streaming TV Site Wins One in FOX Lawsuit

homepageMMSV5As our sister site TVNewser reported, a judge has given a partial victory to TV archiving and streaming site TVEyes.

U.S. District Judge Alvin Hellerstein ruled the site’s keyword search function falls under fair use doctrine after FOX sued the site last year.

A Fox News spokesperson says the network will fight on: “The Court expressly said that it required more information to decide whether TVEyes’ other features — including allowing video clips to be archived, downloaded, emailed, and shared via social media — were fair use.”

The Court has called for another hearing on that part of the case on October 3. Mediabistro sites TVNewser and TVSpy use TVEyes extensively.

Federal Court Rejects Aereo’s Plea to Operate as Cable System

aereoA federal court has rejected Aereo’s appeal to continue operating as a cable company, The Washington Post reports:

If the shuttered streaming video company wants to keep fighting for its survival, procedural reasons require that it do so at the district court level, officials said in a document filed Thursday.

The decision is a win for broadcasters, who had sought a ban on Aereo from the beginning. Initially, the district court decided against an injunction. But a ruling from the Supreme Court earlier this summer reversed that decision. Now the appellate court, following procedure, has also followed suit. Aereo declined to comment; a spokesman for the National Association of Broadcasters did not immediately respond to a request for comment.

How significant is this move? Seeing as Aereo had already voluntarily shut its doors after the Supreme Court verdict, a preliminary injunction doesn’t mean much for the company operationally. But the Second Circuit is effectively telling Aereo that if it wants to argue that it’s a cable company only for the purposes of copyright law — and therefore qualified to pay lower royalties — it’s currently making the argument to the wrong people.

Copyright Office: Aereo Not a Cable Company

aereoA week after Aereo said it would seek to continue operations “as a cable system,” the U.S. Copyright Office has told the streaming TV service that it does not qualify as a cable company under terms of the Copyright Act, CNBC reports:

“In the view of the Copyright Office, internet retransmissions of broadcast television fall outside the scope of the Section 111 license,” the Copyright Office wrote in the letter dated July 16.

The office added that it would not refuse Aereo’s filings outright, but rather would accept them provisionally since the company’s case is still before the courts.

A spokeswoman for Aereo declined to comment on the ruling, but noted that the Copyright Office provisionally accepted the company’s application.

Aereo Intends to Continue ‘As a Cable System’

aereo antennaeIn a letter filed yesterday with the U.S. District Court of New York, Aereo said it plans to go forward as a cable company.

“The Supreme Court’s holding that Aereo is a cable system under the Copyright Act is significant because, as a cable system, Aereo is now entitled to the benefits of the copyright statutory license pursuant to the Copyright Act,” the letter said. “Aereo is proceeding to file the necessary statement of account and royalty fees.”

Aereo argued before the Supreme Court that it was not a cable company, and therefore should not be required to pay retransmission fees to the broadcast networks. The Court ruled 6-3 in favor of the broadcast networks.

“This has been a challenging journey for our team, but your support has continued to lift and propel us forward. We remain committed to building great technologies that create real, meaningful alternatives for consumers,” Aereo CEO Chet Kanojia said in a statement.

Aereo CEO: ‘We Have Decided to Pause Our Operations Temporarily’

aereoIn a letter to subscribers sent Saturday, Aereo CEO Chet Kanojia said the streaming TV service is taking a “pause” as they “consult with the court and map out our next steps” in the wake of last week’s Supreme Court loss:

On Wednesday, the United States Supreme Court reversed a lower court decision in favor of Aereo, dealing a massive setback to consumers.

As a result of that decision, our case has been returned to the lower Court. We have decided to pause our operations temporarily as we consult with the court and map out our next steps. You will be able to access your cloud-based antenna and DVR only until 11:30 a.m. ET today.

All of our users will be refunded their last paid month. If you have questions about your account, please email support@aereo.com or tweet us @AereoSupport.

Read the full letter after the jump. Read more

What’s Next For Aereo?

Aereo_iPadThe Associated Press breaks down the questions raised by yesterday’s Supreme Court ruling in the Aereo case, including the all-important one: what’s next for the streaming television service now that the High Court has sided with the broadcasters?

Although the Supreme Court expressed its thinking on the law, it’s the lower court that must issue a preliminary injunction stopping the service, as requested by broadcasters. That could take a few weeks. It’s not guaranteed that the lower court will halt Aereo’s operations, but it’s very likely.

Once an injunction is issued, broadcasters must prove copyright infringement during a trial. Because it’s now likely that broadcasters will ultimately prevail, Aereo might simply decide to shut down. Even then, broadcasters might still decide to pursue the case and seek damages, possibly as a message to future entrepreneurs contemplating video services that don’t involve licenses.

Although Aereo CEO Chet Kanojia has previously said there’s “no plan” for the streaming service in the event of a Supreme Court loss, his statement yesterday said the company’s “work is not done.”

“We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world,” he said.

Les Moonves on Aereo Ruling: ‘It’s a Very Good Day For Our Future’

CBS CEO Les Moonves appeared on Bloomberg TV this afternoon to respond to this morning’s Aereo ruling. In a 6-3 decision, the Supreme Court ruled that the streaming television service was illegally rebroadcasting content from the major broadcast networks, including CBS.

“All that’s important here is that broadcasters and cable content companies and everyone who’s involved with the content producing business gets paid appropriately for their content,” Moonves said. “And that somebody can’t come and take that content, charge for it, and not pay us back for that content.  So it’s a very good day for our future.” Watch:

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