Seeking a rehearing of an appellate court’s decision in favor of Aereo, Fox and other broadcasters said that the  startup’s ability to continue offering unauthorized streams of their signals “will swallow the entire retransmission licensing regime.”

In a petition for an en banc hearing of the 2nd Circuit Court of Appeals, the broadcasters said that “faced with losing a revenue stream critical to supporting free, over-the-air television,” some “have been forced to consider converting their broadcast networks to subscription-based cable channels.” That was a suggestion floated last week by News Corp. COO Chase Carey as well as Univision, which is also part of the litigation against Aereo.

The broadcasters also noted that cable and satellite companies like Time Warner Cable and Dish Network “are threatening to partner” with Aereo or other startups.

Last month, in a 2-1 decision, the 2nd Circuit refused to reverse a lower court ruling that allows Aereo to continue its operation. Much of its rationale is based on a 2008 2nd Circuit decision that backed Cablevision’s offering of a remote DVR, ruling that such copies did not make for a public performance in violation of the Copyright Act. The appellate court have credence to Aereo’s offering of broadcast streams to dime-sized devices assigned to individual subscribers. They cited the fact the fact that Aereo made a separate copy of the programming for each subscriber during the process of retransmitting the broadcast signal.

“The Court needs to rectify this ruling now,” the broadcasters said. “Otherwise, the loophole it creates will swallow the entire retransmission licensing regime.”

In their brief, filed on Tuesday, they said that one of the “express purposes” of the Copyright Act of 1976 was to establish that “any service engaged in retransmission of copyrighted television programming to the public is ‘publicly performing’ the programming and therefore must pay copyright royalties.”

In a statement, the broadcasters said that the petition for rehearing “is an important next step in ensuring the protection of our copyrighted material.” Paramount, Warner Bros., the DGA, IATSE, SAG-AFTRA, the Writers Guild of America, West, the Independent Film & Television Alliance and MGM also filed an amicus brief in support of the broadcasters. They argued that the court’s reliance on the Cablevision decision was misguided, as it involved “a very different service.”

A spokesman for Aereo said it had no comment.

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