In a ruling that could change the way people watch TV, a New York judge has denied a petition for an injunction against TV-rebroadcasting start-up Aereo, a company partially backed by Barry Diller, Chairman and CEO of IAC/InteractiveCorp (NASDAQ: IACI). The injunction was sought by plaintiffs CBS Corp. (NYSE: CBS), The Walt Disney Co. (NYSE: DIS), which owns the ABC television network, News Corp. (NASDAQ: NWS), owners of the Fox network, and Comcast Corp. (NASDAQ: CMCSA), which owns the NBC network, and other broadcasters, and was based on violation of copyright law.
Aereo, currently only available in New York City, makes an miniature antenna capable of receiving live streams of broadcast TV on an Internet-connected device. The judge ruled that the Aereo device is virtually the same as a DVR, a device which was declared legal several years ago because its re-transmission of programming is made to a single subscriber and is not a performance aimed at the general public. As such, the device does not violate copyright law.
Cable and satellite companies re-transmit programming for public consumption and thus must pay retransmission fees, whereas Aereo is not subject to those same fees according the judge’s ruling. The impact on cable providers like Comcast and Time Warner Cable (NYSE: TWC) could be substantial if the judge’s ruling is upheld in the upcoming trial.
Cable programming is not retransmitted and it is possible that the broadcast networks would simply move their popular broadcast programming to their cable networks. Possible beneficiaries of the ruling are carriers such as Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) that are currently rolling out usage-based fee structures.
Paul Ausick
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