A photograph of Aereo's DVRs at the company's Brooklyn facilities.
Aereo, the company that uses the web to deliver live TV to customers without requiring them to pay hefty cable fees, is riding a wave of good news.
The company has received some assistance from Time Warner Cable (TWC) and indirectly from Comcast, two important partners of the broadcasters that have tried to sue Aereo out of existence. This week, TWC threatened to encourage subscribers to try out the service if the cable company can't reach a deal to rebroadcast CBS shows and the network cuts off its programming to TWC customers. TWC and CBS have clashed over the amount of retransmission fees CBS is asking.
"If Comcast believes original Cablevision DVR ruling is applicable nationwide, Aereo has a much greater chance of being viewed as legal."
Aereo doesn't pay broadcasters retransmission fees because it argues that watching TV through the use of an antenna controlled by users is legal. This unique business model has allowed Aereo's subscribers to watch broadcasts for a fraction of what the cable companies charge. On Monday, Aereo announced that it will soon begin operating in Salt Lake City, Utah, following launches in New York, Boston, and Atlanta. The service is due to also open soon in Chicago.
The major networks, including NBC and CBS, and more than a dozen other broadcasters have filed lawsuits against the company accusing it of copyright violations and of stealing their content. Two federal courts in New York have sided with Aereo, however. If for no other reason, Aereo is dangerous to the networks because the startup has exposed how vulnerable they've become. Technology has simply outpaced copyright law and the protection it once offered big media companies. Because of that, live TV appears to be on the threshold of a major shift.
The broadcasters aren't laying down. They've vowed to stop Aereo, but so far their attempts have largely failed. Their lone victory on the issue has come in a California federal district court against a company ironically named Aereokiller, a similar service. The broadcasters say the ruling means Aereo is banned from operating on the West Coast; some in the media have speculated that the decision is why Aereo hasn't moved into California, and that the conflicting court rulings means the broadcasters and Aereo are headed to the Supreme Court . Turns out we're a long way from that.
Aereo isn't afraid of Aereokiller ruling in California For starters, an Aereo spokeswoman told The Verge that Utah is as far west as the company ever planned to move this year; the decision was made prior to Aereokiller's court defeat. Secondly, Aereokiller has appealed the district court decision and is waiting for a ruling. So, Aereo is still up a court decision with the favorable ruling it received in a federal appeals court in New York.
Eric Goldman, professor of law at Santa Clara University, said that the Supreme Court is likely to factor into the equation only if Aereokiller loses its appeal.
Meanwhile, Comcast appears to be indirectly supporting Aereo's argument that the service is legal nationwide, according to Rich Greenfield, the media analyst at BTIG (see update below with Comcast statement).
Greenfield blogged last month that Comcast, which owns NBCUniversal, is planning to roll out a cloud-based digital video recording service across the country but won't acquire new licenses from programmers before launching the service. As part of the Comcast X1 platform, the cloud-based DVR enables consumers to create their own individual copies of TV shows and store them on the company's servers. Greenfield suggested that Comcast's current licenses don't cover this, but said the company's managers told him they're depending — as is Aereo's leaders — on protection from a landmark legal precedent.
Comcast is strengthening Aereo's claim that the service should be legal nationwide The court decision known simply as the Cablevision case established that a company is allowed to help a consumer create a unique copy of a TV show for personal use. Greenfield wrote that he believes Comcast is the first programmer / multichannel video programming distributor (MVPD) to rely on the Cablevision ruling for a national DVR roll-out, and by doing so, managers there are strengthening Aereo's legal claims.
"If Comcast believes the original Cablevision RS-DVR ruling is applicable nationwide," Greenfield wrote, "Aereo has a much greater chance of being viewed as legal nationwide."
Greenfield argued Comcast should be rooting for Aereo to prevail in court because that would enable it to use the precedent against programmers and help it reduce its retransmission costs. He seemed to suggest that this would be more profitable for the company than protecting NBC's shows. So far, however, Comcast has done little but claim that Aereo is illegal. Maybe if the broadcasters challenge Comcast's cloud DVR, the company will change its thinking.
Update: A Comcast spokeswoman has forwarded this statement from the company: "We think the courts will ultimately agree that Aereo must follow the rules the Congress has established for all businesses that retransmit broadcast signals for a profit. We also believe that these same legal rules permit platforms that properly license programming to provide their customers with the efficiency of a network DVR. In our view, the courts will ultimately conclude both of these positions are compelled by current copyright law."