After the 2nd Circuit Court of Appeals on Tuesday shot down TV broadcasters’ request to reconsider a decision allowing Internet-streaming startup Aereo to stay in business, Fox Broadcasting said it is reviewing its options and may appeal to the U.S. Supreme Court.
Fox and other broadcasters had sought an injunction to shut down Aereo, which they accuse of copyright infringement for retransmitting their signals to Internet-connected devices without permission. Aereo, whose backers include IAC chairman Barry Diller, has defended the service as a legal option for consumers to receive free over-the-air TV.
“The 2nd circuit’s denial of our request for an ‘en banc’ hearing, while disappointing was not unexpected,” Fox said in a statement. “We will now review our options and determine the appropriate course of action, which include seeking a hearing in the U.S. Supreme Court and proceeding to a full trial on the merits of the case.”
An Aereo rep said, “We are pleased by the further ruling in favor of Aereo by the Second Circuit Court of Appeals.”
In their April petition for an en banc hearing by the 2nd Circuit, TV broadcasters argued that if Aereo’s system is deemed legal, “the loophole it creates will swallow the entire retransmission licensing regime.”
In the U.S., TV broadcasters generated $2.36 billion in retrans fees in 2012, according to SNL Kagan. The research firm projects that to nearly triple to $6 billion by 2018, amounting to 23% of the expected $26.2 billion in TV station ad revenues.
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’s what 21st Century Fox COO Chase Carey said at the recent NAB Show, and it was a sentiment echoed by others including CBS and Univision, which are also party to the litigation against Aereo.
Aereo has won two court victories, basing its defense on a 2008 2nd Circuit decision that backed Cablevision Systems’ Remote Storage DVR service. In that case, the court ruled that such copies — initiated by individual subscribers — did not represent a public performance in violation of the Copyright Act.
New York-based Aereo has prevailed so far in comparing its live TV and remote DVR service to Cablevision’s RS-DVR. The startup operates large arrays of small antennas, which are dedicated to an individual user, and similarly allocates back-end storage to specific subscribers.
Aereo has launched in New York City, Boston and Atlanta and has set plans for a September debut in Chicago. The service’s base plan is $8 per month, which includes 20 hours of DVR storage, and a $12 monthly option provides up 60 hours of recording space. The company has not disclosed how many paying subscribers it has signed up.