Obama Administration Sides With Broadcasters Against Aereo

Aereo makes a miniature antenna that captures over-the-air broadcast TV signals and then sells subscriptions to those signals via streaming over an Internet connection. The small company has won initial victories in a majority of the lawsuits brought by the networks, which tremble at the thought that an Aereo win would completely disrupt the current pay TV model where cable and satellite companies pay fat retransmission and carriage fees to the networks for the right to distribute network programming. If Aereo prevails, what is to stop the cable and satellite providers from setting up their own retransmission agreements with the company and telling the networks what they can do if they don’t like it.

The Solicitor General’s brief argues in favor of the network position that Aereo infringes on broadcasters’ copyrights. Here is the heart of the government’s argument:

Unlike a purveyor of home antennas, or the lessor of hilltop space on which individual consumers may erect their own antennas … respondent does not simply provide access to equipment or other property that facilitates customers’ reception of broadcast signals. Rather, respondent operates an integrated system — i.e., a ‘device or process’ — whose functioning depends on its customers’ shared use of common facilities. The fact that as part of that system respondent uses unique copies and many individual transmissions does not alter the conclusion that it is retransmitting broadcast content ‘to the public.’ Like its competitors, respondent therefore must obtain licenses to perform the copyrighted content on which its business relies. That conclusion, however, should not call into question the legitimacy of businesses that use the Internet to provide new ways for consumers to store, hear, and view their own lawfully acquired copies of copyrighted works.

Aereo has received financial support from Barry Diller, CEO of IAC/InteractiveCorp (NASDAQ: IACI), and the little company’s opponents include the ABC network owned by Walt Disney Co. (NYSE: DIS), CBS Corp. (NYSE: CBS) and NBC, owned by Comcast Corp. (NASDAQ: CMCSA).