In a joint statement on Monday, Fox, Tribune, PBS, Univision and WNET called an appellate court decision favoring the Barry Diller-backed Aereo "a loss for the entire creative community.
An appellate court on Monday delivered what could be a major blow to broadcast networks hopes for retransmission fees to bolster their ad revenues, refusing to stop the Barry Diller-backed Aereo Inc.
In a two-to-one decision Monday, the U.S. Court of Appeals for the 2nd Circuit rejected a request by major broadcasters and content creators including some Hollywood studios to stop Aereo from retransmitting TV stations signals over the web for free.
"The court has ruled that it is OK to steal copyrighted material and retransmit it without compensation. While we are disappointed with this decision, we have and are considering our options to protect our programming. In the meantime, we plan to move forward towards a trial on the merits of the case, and on claims that were not impacted by this appeal. We remain confident that we will ultimately prevail."
Upholding a similar lower court ruling, Judges Christopher F. Droney and John Gleeson said the preliminary injunction sought by all the major broadcast and public broadcast networks to stop Aereo from using thousands of tiny antennas each assigned to a single household to deliver programs over the web was unwarranted.
Broadcasters, who now are charging cable systems retransmission fees to rebroadcast signals that Aereo is not paying, had argued that Aereo's actions amounted to copyright infringement.
Aereo charges households for its service, but argues that because each household uses a separate antenna it doesn't have to pay rights fees. It says it is merely providing each household the same signal it could get by setting up its own antenna.
Judges agreed. They rejected broadcasters' arguments that Aereo essentially duplicates cable systems. The judges said that by offering the output of a single antenna to a single household, Aereo doesn't deliver a "public performance" that would generate rights issues.
Instead they said Aereo, currently available only in New York, offers the combination of three now separate services to an individual household -- a digital video record, a Slingbox-like service that allows internet programs to be watched on a TV and finally a web-based service that allows broadcasts to be watched as easily on mobile devices or a computer as on a TV.
"The outcome of this appeal turns on whether Aereo's service infringes the Plaintiffs' public performance right under the Copyright Act," said the decision. "If the potential audience of the transmission is only one subscriber, the transmission is not a public performance."
Dissenting Judge Denny Chin offered a sharply different view.
"In my view, by transmitting (or retransmitting) copyrighted programming to the public without authorization, Aereo is engaging in copyright infringement in clear violation of the Copyright Act," he said.
He called Aereo's individual antennas "a sham."
"The system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law," he wrote.
Monday's ruling immediately brought praise from consumer groups and expressions of concern from TV stations.
Chet Kanojia, Aereo CEO and founder in a statement, said the decision, "again validates that Aereo's Technology falls squarely within the law and that's a great thing for consumers who want more choice and flexibility in how, when and where they can watch television.
"Today's ruling sends a powerful message that consumer access to free-to-air broadcast television is still meaningful in this country and that the promise and commitment made by the broadcasters to program in the public interest in exchange for the public's spectrum, remains an important part of our American fabric," he said.
National Association of Broadcasters executive VP Dennis Wharton said NAB was "disappointed" and would be reviewing its legal options. He pointed to the strong language of Judge Chin's dissent.
The potential impact to broadcasters of the decision could be dramatic.
Most obviously the decision could threaten TV networks ability to extract rights fees from cable systems, which have been reluctant to pay retransmission fees for broadcast programs. The decision could also threaten cable systems, by making it much easier to get TV on the Web without paying for cable.
- Company Legal & Law Matters