Hearst-Owned TV Station in Boston Sues Aereo

Newsflash from your Hollywood Attorney:

The ABC affiliate is the latest broadcaster to demand an injunction. It's the first lawsuit against Barry Diller's digital TV service outside of New York.

Aereo is expanding its footprint and so is the litigation that challenges the upstart tech company's right to digitally deliver television.

The latest lawsuit came Tuesday in a Massachusetts federal court. Hearst Stations, owner of ABC affiliate WCVB-TV, is demanding an injunction that would stop Aereo, which launched in the Boston area in May, from using antennas to capture over-the-air programming for the delivery onto consumers' digital devices.
According to Hearst's lawsuit, "If Aereo is permitted to profit from the unauthorized retransmission of copyrighted television programming, WCVB will be deprived of existing and potential revenue streams from advertising and authorized retransmissions."

Aereo is already at war with the other networks over its technology.
The company, which was backed financially by Barry Diller and others, was able to fend off a preliminary injunction in round one in a New York federal court. Then, Aereo was able to gain an important appellate victory in April from the Second Circuit.
But what other courts around the nation will decide is still an open question. Especially since a California judge decided to stop one of Aereo's competitors earlier this year.
As Aereo moved into the Boston area, it brought a lawsuit against CBS that sought a declaration about the legal validity of its system. CBS reacted by accusing Aereo of jumping the gun, and it's still to be decided whether or how that lawsuit will proceed.

Whatever happens, it looks like Aereo will be tested in a Massachusetts court. In some ways, it is home turf for Aereo as the company is headquartered in Boston. Still, given a choice, Aereo would have preferred to adjudicate the legality of its Boston operations in a court that was beholden to the Second Circuit.
In asking for a judge's intervention, Hearst cites the Copyright Act's public performance rights. In the Aereo cases, the main subject of controversy has been whether Aereo's delivery of television to individual subscribers is "to the public."

Read the Full Compaint here... http://www.scribd.com/doc/152998617/aereoboston

The lawsuit also emphasizes Aereo's "Watch Now" feature. Aereo has fought back against the broadcasters' legal claims by pointing to a prior Cablevision ruling and arguing that its subscribers are watching playbacks of recorded material. Hearst attempts to direct the judge's attention to the live nature of Aereo's service.

"Aereo claims that its service enables its subscribers to watch WCVB’s programming 'live,' i.e., at the same time that it is broadcast by WCVB," says the lawsuit. "Indeed, this is a key aspect of Aereo’s service and has featured heavily in its advertising."

Read More.... http://www.hollywoodreporter.com/thr-esq/aereo-sued-by-hearst-owned-583164

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A Group of Broadcasters (Fox, ABC, CBS, NBC) filed a copyright infringement lawsuit in Washington DC against a similar outfit to Aereo that is also offering re-transmission services to consumers.

Fox Television is going to war with Barry Diller, the man who helped found the network. On Thursday, Fox, ABC, CBS, NBC, and several other television broadcasters filed two major copyright infringement lawsuits against Aereo, a service that's planning to launch in the New York area on March 14th to allow consumers the ability to watch broadcast television online through digital streaming.

Aereo announced it had raised $20.5 million in venture funding at a news conference last month.

In making the announcement of the forthcoming launch, Diller, who joined Aereo's board after his company IAC/InterActiveCorp provided major financial backing, told reporters that Aereo "pries over-the-air broadcast television out of [a] closed system.”

The broadcasters allege that the Aereo service infringes upon the copyright protection afforded to the content of broadcasters’ television programming.  In one lawsuit filed in New York federal court last week, the broadcasters say that the $12-a-month service will “provide unlimited streams of Plaintiffs’ television broadcasts over the Internet in direct competition with Plaintiffs.”  The broadcasters’ complaint also alleges “[c]opyright law does not permit Aereo to appropriate to itself the value of Plaintiffs’ television programming by retransmitting over the Internet without proper licenses” and “simply put, Aereo is an unauthorized Internet delivery service that is receiving, converting and retransmitting broadcast signals to its subscribers for a fee.” The broadcasters claim that statutory definitions and interpretations of a “public performance” render Aereo’s service impermissible as copyright infringement.  Currently, one group of broadcasters including Fox, Telemundo, and PBS, represented by Steven Fabrizio at Jenner & Block, is seeking a permanent injunction and statutory damages against Aereo. Another set of broadcasters including CBS, NBC, and ABC, represented by Bruce Keller at Debevoise & Plimpton, is after pretty much the same thing, though the cases are likely to be consolidated.

Broadcasters are not unfamiliar with battling companies that offer digital streaming services. In 2010, the same major broadcasters sued streaming television companies FilmOn and ivi, and were granted injunctions against both services.  Ivi’s strategy utilized Section 111 of the Copyright Act, which authorizes cable TV companies to make secondary transmissions of copyrighted works embodied in primary transmissions so long as a nominal statutory licensing fee is paid.  The Judge rejected this argument, holding “[n]o technology . . . has been allowed to take advantage of Section 111 to retransmit copyrighted programming to a national audience while not complying with the rules and regulations of the FCC and without consent of the copyright holder.”  Ivi has appealed this judgment, arguing that it only needed to pay a compulsory license fee.  The appeal will be heard at the 2nd Circuit later in March.  Broadcasters have well-founded reasons to fear the threat posed by startups like Aereo – Deloitte’s 6th edition of its report The State of the Media Democracy and other sources report a long term trend of increased “cord-cutting,” a term that refers to the choice by consumers to unsubscribe from cable services in favor of accessing programming content online.  Although current statistics are not dispositive, the proliferation of websites like Hulu has increased the usage of digital streaming services, especially for video content.

Aereo defends its service stating, “[c]onsumers are legally entitled to access broadcast television via an antenna and they are entitled to record television content for their personal use. Innovations in technology over time, from digital signals to Digital Video Recorders (“DVRs”), have made access to television easier and better for consumers. Aereo provides technology that enables consumers to use their cloud DVR and their remote antenna to record and watch the broadcast television signal to which they are entitled anywhere they are, whether on a phone, a tablet, a television or a laptop.”  The district court judge in the ivi case noted that when Congress enacted Section 111, it was doing so with an “understanding of the cable industry as a highly localized medium” and ivi’s service, in contrast, ”retransmits broadcast signals nationwide, rather than [to] specific local areas.” Alternatively, because Aereo is offering its initial service next month in New York, before expanding “a step at a time, a market at a time,” the company may avoid the pitfalls ivi encountered.  The Aereo lawsuit has the potential to provide substantive implications for the future of the Internet TV business and cord-cutting trend in the broadcast television industry.

Read More... http://www.ipbrief.net/2012/03/09/cord-cutting-culprit-fox-television-and-major-broadcasters-claim-aereo-broadcast-streaming-service-infringes-programming-copyrights/ 
and
http://www.hollywoodreporter.com/thr-esq/aereo-barry-diller-stream-tv-online-296426

Barry Diller said Monday that Aereo's recent legal victories make it clear that networks and studios suing to stop his IAC-owned service are fighting a losing battle.

The IAC topper says networks and studios' impending petitions for government intervention against the streaming service are also futile: “No incumbent ever wants to see its territory invaded."

“We think the lawsuit is over, but what we think is broadcasters are doing is saying this is a terrible threat and [they are trying to] get Congress to act," the IAC chairman and senior executive told a crowd at the Milken Institute's Global Conference in Los Angeles. "I don’t think it will happen, but its up for grabs.”

Diller said it was not his intent to disrupt the cable and broadcast industry. Aereo it just part of the changes in business models being brought about by technology advances.

“The reason it interested me was not that I wanted to go into the newly enabled business of technology with antennas,” said Diller  “We’re just starting on video.. It's just beginning and its going to absolutely change most things. It will break up the closed and bundled system of cable and satellite distribution because I think it has  gotten unwieldy.”

ANALYSIS: How Talent Loses if Aereo Wins

The resistance has not surprised him. “No incumbent ever wants to see its territory invaded,” said Diller. “That makes them angry if you invade the territory of a closed system.”

Diller is the primary backer of Aereo, which broadcasters and studios see as the latest technological challenge to owners of intellectual property. Aereo takes signals from over the air -- without paying royalties or retransmission consent fees -- and delivers them over the Internet in packages sold to viewers as an less expensive alternative to paying for cable TV. 

Aereo offers consumers a full lineup of broadcast stations. That includes the ability to fast-forward past commercials and record programs on digital recorders for later use.

On April 1, The Second Circuit Court of Appeals declined to issue an injunction against the streaming-TV service Aereo in a legal battle with broadcasters and film studios including Disney’s ABC network and Twentieth Century Fox. Hollywood says Aereo is the same as a cable-television network, so it falls under the 1976 Copyright Act which bans unlicensed communications with “the public,” “by means of any device or process.”

The three-judge panel ruled that by providing individual streams to consumers Aereo was similar to a consumer streaming a TV show from a Slingbox in one room to a TV set in another room. The judges said Aereo has one TV antenna and one recording device for each subscriber, so it is not the same as a cable TV system.

Aereo is already available in the New York City market and will launch in Boston on May 15. The company has said it will soon expand to about 20 other markets, including Chicago, Philadelphia and Washington, D.C.

When asked about the threat by broadcasters to move their prime programming to cable TV to protect it from Aereo, Diller said “there is literally no chance. I think they are doing it  so enough people will say that would be terrible. Let’s get Congress to change the law.”

Read More... http://www.hollywoodreporter.com/news/barry-diller-defends-aereo-says-448340

$38 million earlier this year to launch in 22 cities - Aereo to Launch in Boston on May 15

The upstart service that allows users to watch and record local TV without a cable subscription has announced that it will be launching in the Boston metropolitan area on May 15. Although the company originally launched in March 2012 in New York, Aereo's headquarters are based in Boston.

"Consumers deserve more choice and flexibility in how they experience television, and Aereo provides them a high-quality, rationally priced alternative," said Aereo founder and CEO Chet Kanojia. "This is an exciting step forward for the company."

The move has been telegraphed for months.

In January, at the Citi Global Internet, Media & Telecommunications Conference at CES, Aereo announced that it had raised an additional $38 million and would be expanding into 22 more cities. The financial commitment came from Barry Diller's IAC, Highland Capital Partners and other investors who participated in initially seeding the company with funds.

At the beginning of April, Aereo prevailed over broadcasters in an appellate ruling. All of the major TV broadcasters are suing the company for allegedly violating its copyrighted programming, but the plaintiffs have had trouble convincing judges of a probability of ultimately prevailing in the lawsuit for purposes of attaining an early injunction. The case continues at the trial court, and the broadcasters recently asked for a rehearing at the Second Circuit.

Next month, Aereo says its product will be available to 4.5 million consumers in 16 counties in Massachusetts, New Hampshire and Vermont.

Read More... http://www.hollywoodreporter.com/news/aereo-launch-boston-may-15-444662

New TV LAW 'STELA': Hollywood's Next Big Legislative Fight - various legal controversies over the future of television

An analyst suggests that the renewal of an obscure satellite TV law could command the attention of the major broadcasters, big pay-TV distributors and giant tech companies.

Although political gridlock provides cause for disbelief that big legislation concerning the media industry is imminent, there might be reason to think that next Wednesday will be the beginning of a furious lobbying campaign in the nation's capital.

The past year has featured various legal controversies over the future of television.

In particular, broadcasters have battled Dish Network over an ad-skipping DVR they believe is "a bootleg, commercial-free video-on-demand service" that's in alleged violation of their retrans agreements. In addition, broadcasters have gone to war against Aereo over TV signals picked up by antennae and then relayed to subscribers online. And then, there's been other disputes over broadcast TV signals distantly retransmitted by pay-TV distributors.

The skirmishes have taken place in courtrooms and around negotiating tables, but Washington D.C. lawmakers might soon be getting involved thanks to the expiration of an obscure law -- the Satellite Television Extension and Localism Act.

STELA provides statutory licenses that allow satellite TV companies to distantly retransmit broadcast signals to local subscribers who otherwise would be in the dark. Without the law, it's estimated that 1-to-1.5 million who don't live in broadcast areas would lose access to CBS, NBC, ABC and Fox. It's a law that needs to be renewed after five years, and the expiration date comes up in 2014.

On February 13, the House Communications Subcommittee is scheduled to hold a meeting on renewing STELA.

But according to Paul Gallant, an analyst at Guggenheim Securities who previously worked as a legal advisor to the FCC chairman, the pending legislation might be the impetus to go larger.

Gallant notes in a research report that at hearings last summer, "multiple members of Congress expressed unhappiness with signal blackouts during retrans disputes. That suggests Congress might use this satellite bill to ban signal blackouts and require arbitration to resolve pricing disputes."

That will be unsettling, he adds, for broadcasters like CBS, Sinclair, Gray, Hearst, LIN, Belo, Media General and Tribune. At the same time, companies he believes that would stand to benefit are Time Warner Cable, Charter, Cablevision, DirecTV and Dish.

Broadcasters certainly wouldn't want to undercut the deal-making leverage that comes with the prospect of blackouts, but in theory, there could be the possibility of bargaining for something else.

Last year, a federal judge denied the broadcasters' attempts to get an injunction that shut down Aereo. The 2nd Circuit Court of Appeals will imminently be issuing a ruling in the broadcasters' appeal.

"If broadcasters run into unfavorable court rulings in the next year, they may press Congress to require distributors like Aereo to pay for signals like cable/satellite do," writes Gallant.

Read More... http://www.hollywoodreporter.com/thr-esq/stela-hollywoods-next-big-legislative-419180