Aereo CEO Chet Kanojia's demeanor was downright subdued today, despite his win in the Second Circuit Court of Appeals. The court rejected a request from ABC, NBC, CBS, and other top broadcasters to issue a preliminary injunction against Aereo, the company he founded. The ruling means Aereo, which streams live TV to internet subscribers without compensating the networks, will not be shut down and therefore is a step closer to throwing traditional TV into a state of chaos.
"I'm very excited about how the courts are reading the law," the CEO told The Verge. "They are judging this case on the merits and not on anything else. This is great validation, but all in all, I look at this as just the next step."
"This is great validation, but all in all, I look at this as just the next step."
Likely, there are many steps left for Aereo to take. It was about a year ago that the broadcasters filed suit and alleged that Aereo, which doesn't pay the networks any licensing fees, violated their copyrights. They claimed that because Aereo was supplying live TV broadcasts to numerous people, it was providing a public performance of copyrighted work. Public performaces require licensing fees, but Aereo found a way around them. Subscribers are assigned their very own dime-sized antenna, which are housed in Aereo's facilities and controlled with the subscriber's PC. For this reason, Aereo managers say they distribute nothing. It is the customer who uses the mini rabbit ears to access freely available over-the-air signals. Today, the Second Circuit called that a private performance.
But this decision affected only the preliminary injunction. The networks have promised to keep fighting and their copyright complaint will continue to wind through the courts. "This case is still in its early stages," ABC and NBC said in a joint statement. "We are confident that when the record is fully developed the rights of content owners will be protected."
"We are confident that when the record is fully developed the rights of content owners will be protected."
The broadcasters say the public could suffer if Aereo wins. Their lawyers painted a doomsday scenario in court last summer when they told a district court judge that if Aereo is allowed to access their broadcasts without paying for them, it could lead to serious financial hardship and might mean the end of free TV. As a result, the Super Bowl could be a pay-for-play show, the lawyers said. When reminded of this dire warning, Kanojia lost his temper for a split second. "That's garbage," he said. "[CBS CEO] Les Moonves says he's not losing any sleep over Aereo, so who are you supposed to believe? It's classic for them to say 'Let's not change because we control the table.'"
"Judging from the past, if litigation doesn't work, then they'll go to Congress."
Kanojia seems prepared for a long fight. "Judging from the past, if litigation doesn't work, then [the broadcasters will] go to Congress," Kanojia said. "That's the path they've taken before."
But is this all worth it? Is there any money in delivering TV content that anyone can access for free as long as they're willing to climb up to their roof and install an antenna? And what about that report in The Wall Street Journal this weekend, which indicated that Aereo's legal troubles may be scaring away potential partners that could help the company expand into more markets?
"I just want to clarify we're not chasing deals," Kanojia said. "There's an ton of inbound interest in this company. There are a lot of people who want to work with us. If I can identify the next benefit to the consumer through a particular partnership I'm all for it. The playbook has always been very simple: build out 22 markets, get to a base level of subscribers ...we don't need any partners to be a successful business."
Aereo's premium subscription plan costs $12 a month, which at first blush doesn't seem like all that much revenue when compared to the dollars going into other types of media. Remember, Netflix has built a streaming-media empire by charging $8 a month. Aereo, which operates in New York and parts of New Jersey, Connecticut, and Pennsylvania, has plans to be in over 20 markets by the end of the year. The company could be what many wannabe cord cutters have been waiting for: an online source for live sports and news.
"I just want to clarify we're not chasing deals."
As for the perceptions that Aereo's legal troubles have spooked potential partners, today's ruling should go a long way to solving that problem. Either way, Kanojia doesn't sound sorry he and his company are developing reputations as raiders. He says the status quo is ripe for revolution. He notes that young people aren't signing up for cable and there's a lot of interest from companies that want TV distribution to be opened up to new platforms. He says consumers are gravitating towards innovative new services, including his. "Business is good," Kanojia said. "We're getting a lot of engagement. The service is growing. This validation today was important for us. We like our chances."