Aereo Raises $34 Mil Round from Barry Diller’s IAC, Gordon Crawford and Others

Aereo, the Internet TV startup facing a legal assault from TV broadcasters, announced it has raised $34 million in third-round funding from Barry Diller’s IAC and other investors.

The funding brings New York-based Aereo to about $97 million raised to date. IAC was joined in the latest round by media investor Gordon Crawford and Himalaya Capital Management, as well as existing investors Highland Capital Partners, FirstMark Capital and others.

Aereo has been sued by major broadcasters, including ABC, CBS, Fox and NBC, which allege the startup is illegally retransmitting their TV signals. The Supreme Court is holding a conference this Friday, Jan. 10, when it will meet to decide whether to grant review to several cases including the broadcasters’ challenge to the legality of Aereo.

SEE ALSO: Aereo to Broadcasters: Go Ahead, Take the Case to Supreme Court

For now, Aereo is saying it will use the funding to expand nationwide. Currently, Aereo is available in 10 markets — falling well short of its goal of rolling out to 22 U.S. cities in 2013. The company has cited technical and weather-related issues for stalling the deployment, and says it expects to expand to another five markets by the end of the first quarter. Aereo currently has 105 employees, more than doubling from 45 one year ago.

“Aereo has scaled very quickly in 365 days and this additional funding will allow us to maintain this rapid pace of growth,” Aereo CEO and founder Chet Kanojia said in a statement. “We are thrilled to have a world-class group of investors who believe innovative, cloud-based technologies, like Aereo, are the future.”

The broadcasters argue that Aereo’s only innovative is clever legal maneuvering. In a brief filed with the Supreme Court, they accused Aereo of designing its business “to achieve the for-profit exploitation of the copyrighted works of others on a massive scale.”

Aereo, which first launched in New York City in March 2012, offers access to live over-the-air TV signals and recorded programming to subscribers on a range of devices. Aereo argues that the service is a private performance, allowable under fair-use provisions of the Copyright Act, because the tiny antennas it uses are allocated to specific users.

Broadcasters sued Aereo last year, but the Second Circuit denied their request for an injunction to force Aereo to stop offering the service. The startup has successfully defended itself so far by relying on a 2008 Second Circuit ruling that found Cablevision Systems’ remote-storage DVR (RS-DVR) service did not violate copyright laws.

But broadcasters say Aereo is incorrectly portraying itself as merely a provider of technology. “Make no mistake about it,” they said in their Supreme Court brief. “Aereo is not a hardware supplier. It offers a subscription service.”

Aereo is available to consumers who live in the following markets: New York City, Boston, Atlanta, Miami, Salt Lake City, Houston, Dallas, Denver, Detroit and Baltimore.

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