Cable companies are required by the 1992
Cable Television Consumer Protection and Competition Act to negotiate for
retransmission consent, usually paying broadcasters for the right to carry their signals. Broadcasters argued that Aereo was a threat both to their business model by undermining the cable retransmission fees and the size of their audience. Because the fees that cable companies paid for broadcast content could comprise up to 10% of a broadcaster's revenue, broadcasters objected to Aereo's re-distribution of this content without paying any fees. Broadcasters have also identified Aereo as part of the
cord-cutting trend among television audiences that poses a threat to broadcasters' advertising revenue. In somewhat similar cases, the
U.S. District Court for the Central District of California granted an injunction against Aereo's rival
FilmOn, a similar service. However, the district court's injunction was legally binding only in its jurisdiction (including the
West Coast of the continental United States,
Alaska and
Hawaii) and is currently being appealed to the
Ninth Circuit Court of Appeals. Other competitors were blocked from providing service in
Los Angeles and
Seattle by similar injunctions.
Federal court On March 1, 2012, two weeks before Aereo's initial launch in New York City, Aereo was sued for
copyright infringement by a consortium of major broadcasters, including
CBS Corporation's
CBS,
Comcast's
NBC,
Disney's
ABC and
21st Century Fox's
Fox. On July 11, Federal Judge
Alison Nathan denied this injunction, citing as precedent the
2008 Cablevision case, which established the legality of cloud-based streaming and DVR services. In response to the decision, the Aereo founder and CEO,
Chet Kanojia, said, "Today's decision shows that when you are on the right side of the law, you can stand up, fight the Goliath and win." In a subsequent interview with CNET, Kanojia asserted, "With one step, we changed the entire TV industry. The television industry and its evolution are now starting towards the Internet and that was stopped until Aereo came along.... And I think as consumers start migrating to the Internet, new programming and new content are going to come in."
Second Circuit appeal The plaintiffs appealed the decision to the
U.S. Court of Appeals for the Second Circuit. Several other players in the industry, such as cable provider Cablevision, the
Electronic Frontier Foundation, and the
Consumer Electronics Association, filed
amicus briefs. On April 1, 2013, the federal appeals court upheld the lower court's ruling by finding that Aereo's streams to subscribers were not "public performances" and thus did not constitute copyright infringement. The appeals court also affirmed the earlier district court decision that denied the broadcasters a preliminary injunction against Aereo. In response,
News Corporation Chief Operating Officer Chase Carey stated that the company is contemplating taking Fox off the air and converting it to a cable-only channel: "We need to be able to be fairly compensated for our content... we can't sit idly by and let an entity steal our signal. We will move to a subscription model if that's our only recourse."
Univision and CBS have also stated that they may also follow and convert to cable-only.
Supreme Court In October 2013, the broadcasters filed a petition to the
United States Supreme Court to take up the issue. On January 10, 2014, the Supreme Court agreed to hear the case. In February 2014, in advance of the case being taken up by the Supreme Court, a judge in the 10th Circuit Court of Appeals granted a preliminary injunction against Aereo, blocking the service within the
10th District, which includes
Colorado,
Kansas,
New Mexico,
Oklahoma,
Utah,
Wyoming, and
Yellowstone National Park. On November 17, 2013, the
National Football League and
Major League Baseball filed a joint
amicus brief to the Supreme Court that warned that sports programming would likely migrate from broadcast to cable television and that Aereo may put the US in violation of several international treaties, which prohibit the retransmission of broadcast signals over the Internet without their copyright holders' consent. The
United States Department of Justice and
United States Copyright Office also filed a joint brief in March 2014 that stated that Aereo's "system is clearly infringing." The Supreme Court heard oral arguments on April 22, 2014. == Decision ==