You will be redirected back to your article in seconds

Barry Diller tubthumps Aereo ambitions

Media stocks take a hit after judge's ruling lends legitimacy to service

An emboldened Barry Diller expects Aereo to launch in every big U.S. city by sometime next year after a judge opted this week not to shut the service down during litigation with broadcast networks — a decision that hammered media stocks Thursday.

“We’re going to proceed. We don’t care. It will take a year, six months, two years. We’re going to move, we’re going to really start marketing. Within a year and a half, certainly by 2013 at some point, we’ll be in every major American city,” Diller told Bloomberg Television during Allen & Co.’s media retreat in Sun Valley, Idaho.

Broadcasters are trying to shutter Aereo, which enables its subscribers to watch shows online via broadcast signals captured with miniature personal antennas at Aereo’s facilities. Unlike cable and satellite companies, Aereo doesn’t pay the retransmission fees that broadcasters depend on for an increasing chunk of revenue. The venture, which charges $12 per month, so far serves only New York.

“One of my friends who runs a large broadcast company said, ‘You succeeded in dropping my stock by 2%.’ I did not,” Diller said.

CBS stock fell as much as 3.5% Thursday before ending off 1% at $30.61; Comcast, which owns NBC, fell 2.2%. It ended the day off 1.99% at $31.10; Fox parent News Corp. dipped 1.7% during trading, closing down 0.69% at $21.73. Walt Disney closed up 0.30% during the session at $47.41.

Showbiz stocks are feeling the pinch on several fronts. An ongoing cable carriage battle between Viacom and DirecTV knocked both stocks. DirecTV fell 1.25% to $47.55; Viacom eased 0.96% to $46.28.

U.S. District Judge Alison Nathan ruled Wednesday that broadcasters had not shown a “likelihood of success on the merits” of their case and turned down their request for a preliminary injunction. In siding with Aereo, funded by investors including Diller’s IAC/InterActive Corp., she gave some credence to the startup’s legality. Previous efforts to offer digital streams of free broadcast signals to subscribers have been halted in court.

“I really did think we were on the side of the angels. I thought that the ability for a consumer, for an American, to receive broadcast over-the-air signals is their right. And we are simply a technologically advantaged way of doing it, in a modern way. So I really did think we were on the right side of it,” Diller said. “I’m happy that in the first test of it the judge agreed with this.”

Over his long career, Diller has been a Hollywood studio chief as well as head of the Fox Television Network before launching IAC, a collection of online businesses. It faced some initial skepticism but has become a major force in online commerce. IAC also owns the Daily Beast and Newsweek.

“Over my life, I’ve been at different perimeters. I like disrupting things,” Diller said.

A key legal distinction for Aereo lies in its thousands of dime-sized antennas, allowing each subscriber to choose to watch a broadcast show online in real time or to play it back as on a DVR. The networks and New York local stations called it a “gimmick” and argued that Aereo violated the Copyright Act’s right of public performance, specifically its provision barring unauthorized transmission of copyrighted works.

But Nathan concluded that the antennas operate independently, backing Aereo’s contention that it is essentially renting remote equipment to its users that is comparable to what they can install at home.

In her opinion, Nathan drew similarities between Aereo’s technology and a remote-storage DVR introduced several years ago by Cablevision. The latter was the focus of a landmark ruling by the 2nd Circuit Court of Appeals that held that the remote DVR did not infringe on copyrights.

Broadcasters on Thursday wasted little time in filing for an appeal, sending notice to the 2nd Circuit for review of their case.

Steven Werier, attorney with Cowan, DeBaets, Abrahams and Sheppard, said the appellate court “could very well take a broad reading of the facts” and even revisit the Cablevision ruling. In that case, the 2nd Circuit found that because it was an individual consumer who made the individual copy, as he was still in control of the DVR, there was no violation of the right of public performance.

In a written analysis of the Aereo decision, Werier noted that Nathan wrote in the opening paragraph of her opinion that “but for Cablevision’s express holding regarding the meaning of the Copyright Act provision,” the broadcasters otherwise would have prevailed.

Werier said he took Nathan’s comment as “essentially inviting” the appeals court to reconsider the Cablevision ruling.

The Supreme Court declined to review the Cablevision decision in 2009 but ultimately may weigh in on the issue of retransmission consent, he noted. Fox, CBS and NBC are suing Dish Network over its AutoHop feature that allows consumers to more easily skip through commercials. That suit is likely to play out in California, raising the possibility of two circuits issuing divergent opinions where some similar issues are at stake.

Popular on Variety

More TV

  • Topic Studios

    Layoffs Hit Topic Studios as TV Division Relocates to West Coast (EXCLUSIVE)

    A small round of layoffs has hit Topic Studios this week in the television division, insiders familiar with the company told Variety. One of the insiders said three executives at the New York-based producer and distributor are out: senior vice president of scripted programming and Viacom alum Lisa Leingang, vice president of development Mona Panchal [...]

  • Peter Weber and Mike Johnson

    'The Bachelor's' Mike Johnson on Diversity and New Leading Man Peter Weber

    ABC named its newest star of “The Bachelor” this week, officially making Peter Weber the leading man for Season 24 of the long-running dating show. Social media backlash ensued following the announcement due to ABC’s selection lacking diversity, yet again. Since the dating franchise began in 2002, there has been only one “Bachelorette” of color [...]

  • ABC Studios Logo

    ABC Studios Head of Alternative Fernando Hernandez Exits

    ABC Studios’ head of alternative Fernando Hernandez has departed from his post at the Disney-owned television studio, a source familiar with the situation told Variety. The Hollywood Reporter first reported the news. Hernandez’s exit follows an executive shuffling at the top in recent months that has included the departure of Amy Hartwick, ABC Studio’s head [...]

  • Rob Cowan, Greg Silverman'The Conjuring 2'

    Greg Silverman’s Stampede, School of Rock Team for Unscripted Series (EXCLUSIVE)

    Former president of Warner Bros. Pictures Greg Silverman is partnering with School of Rock through his content creation company Stampede. The collaboration with the music school will create exclusive content, starting with the development of an unscripted series.  School of Rock operates a network of performance-based education franchises that offer students of all ages guidance [...]

  • TV Roundup: Erica Durance Reprises 'Smallville'

    TV News Roundup: Erica Durance Reprises 'Smallville' Role in 'Arrowverse' Crossover

    In today’s TV news roundup, Erica Durance reprises her “Smallville” role in the CW’s annual “Arrowverse” crossover, and Showtime shares with Variety an exclusive sneak peek at the return of “The Circus.” FIRST LOOKS “2020 is the most important election of our lifetime,” Alex Wagner says in a new trailer for the fourth season of [...]

  • Patrick Whitesell and Ari Emanuel WME

    Endeavor Targets Sept. 27 for Stock Debut, IPO Video Tells Company's Origin Story

    After years of preparation, Endeavor is set to make its formal Wall Street debut on Sept. 27, when its stock will begin trading on the New York Stock Exchange. Endeavor has targeted Sept. 26 for the final pricing of its shares. The stock will trade publicly the following day. Earlier this week, Endeavor said its [...]

More From Our Brands

Access exclusive content