Here’s how Aereo will attempt to survive its Supreme Court loss
Just weeks after the Supreme Court delivered what many thought would be a knockout punch to the streaming television company, Aereo has countered with a plan to re-categorize itself as a cable company.
The legal path forward emerged from Aereo’s part of a joint filing submitted to a federal judge for the Second District Court on Wednesday. The district court initially ruled in favor of Aereo, but since the Supreme Court overruled that decision, the case has taken a new course. Here’s a key part of Aereo’s filing:
“Aereo has been careful to follow the law, and the Supreme Court has announced a new and different rule governing Aereo's operations last week. Under the Second Circuit's precedents, Aereo was a provider of technology and equipment with respect to the near-live transmissions at issue in the preliminary injunction appeal. After the Supreme Court's decision, Aereo is a cable system with respect to those transmissions.”
Essentially, if the judge allows Aereo to become a cable company, regulated under Section 111 of the Copyright Act, then Aereo will likely be able to resume providing its service to customers. The only difference would be that Aereo would have to pay royalty fees to broadcasting companies like ABC, NBC, CBS, and FOX—just like other cable providers such as Comcast and Time Warner.
The problem for Aereo right now is cash flow.
The company discontinued its service in the wake of the Supreme Court decision, even before any court issued a preliminary injunction, which would have compelled Aereo to stop using its army of tiny antennas to snatch broadcast signals out of the air before converting them to digital streams and sending them on to customers’ computers.
“As a result of this good-faith effort, however, Aereo is taking in no new revenue, and continuing to incur enormous costs such as employee salaries, equipment and lease payments, and vendor payments,” Aereo wrote in its filing.
That’s why Aereo needs the court to grant it the license to become a cable company immediately.
Meanwhile, the broadcasters seem ticked off at Aereo’s shift in strategy, describing it as “astonishing” (but not the good type of astonishing) in their part of the joint filing.
“Since the Supreme Court's decision, Aereo and its principals have issued shifting and inconsistent positions,” reads the broadcaster’s part of the filing. “For example, in virtually the same breath, they stated that Aereo would 'continue to fight' the broadcasters but also indicated that Aereo's entire business was 'over now.'"
The broadcasters frustration also stems from the fact that Aereo previously maintained the position that it is “not a cable service” in front of both the district court and Supreme Court.
Aereo is now resting its argument on the Supreme Court’s decision (.PDF), which found that Aereo "is for all practical purposes a traditional cable system," among other things.
Should the district court not grant Aereo’s license to become a cable company, Aereo also asked the judge to be discerning should it come to a preliminary injunction.
The way Aereo sees it, the Supreme Court only said Aereo can’t give customers “near simultaneous transmission of over the air television broadcasts.” But the company also provided its customers with a cloud DVR service that allowed them to record broadcasts for later viewing, and that part of the business, Aereo believes, should remain in tact.
“The Supreme Court opinion did nothing to prohibit—and indeed reaffirms the vitality of—non-simultaneous playback from copies created by consumers,” reads Aereo’s filing.
While all this is going on, Aereo has already began a campaign to rally grassroots support in favor of Congress reshaping copyright law entirely in a way that would let it resume with its old business model.
For a company that once said it “had no Plan B” if the Supreme Court case went against it, Aereo is suddenly making moves left and right.
Photo by Paul Stevenson/Flickr (CC BY 2.0)