Broadband Cable Association of Pennsylvania

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April 2, 2013

Aereo Inc., the Barry Diller-backed technology venture that streams broadcast-TV content online, won an important court challenge Monday brought by NBC and a dozen other broadcast-TV or studio-production companies. The plaintiffs say the Aero service violates copyright law and steals their content for profit. But the U.S. Court of Appeals in New York, in a 2-1 decision, said the plaintiffs are not likely to win on the merits of their case and denied a preliminary injunction against the Aereo service.

The decision enables Aereo, now available only in New York, to expand to other TV markets, and it has said it could launch in Philadelphia this summer. Comcast-owned NBC Studios, NBCUniversal Media and the Spanish-language Telemundo Network Group are among the companies suing Aereo. Broadcasters said on Monday they were disappointed in the court's decision and considering legal options, now that the case is headed for trial.

Aereo CEO Chet Kanojia said the court decision "validates that Aereo's technology falls squarely within the law and that's a great thing for consumers who want more choice and flexibility in how, when and where they watch television." Aereo could be a threat to pay-TV companies such as Comcast Corp. by peeling away pay-TV subscribers to a new service that costs about $10 a month. Aereo also has the potential of depriving NBC, ABC, Fox, CBS and local TV stations of retransmission fees from pay-TV companies, if subscribers move to it. The dissenting Judge Denny Chin called the Aereo's technology platform a "sham" and a "Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law."

Aereo captures broadcast-TV signals on individual dime-sized antennas on an antenna farm, stores the programming for a few seconds, and then streams a copy of the content to subscribers on laptops, smart phones and tablets. Subscribers also can watch streamed Aereo content on a regular television via a Wi-Fi-enabled AppleTV or Roku devices. While the broadcast companies say Aereo is retransmitting their content without paying for it, Aereo says it is creating a copy of the content and then delivering it to individual subscribers. Aereo says its technology conforms with federal laws and a 2008 court precedent involving Cablevision, which stores and transmits TV content from centralized equipment that acts as individual DVRs for subscribers.

Aereo intends to create antenna and server farms in other big TV markets. Analysts say Aereo would be a bigger threat to the $150-billion pay-TV industry if it could negotiate to carry cable channels, such as ESPN or USA, that would give it wider appeal. Diller, the former Fox executive and chairman of IAC/InterActive Corp., is an investor in Aereo and sits on its board. "Today's decision is a loss for the entire creative community. The court has ruled that it is OK to steal copyrighted material and retransmit it without compensation," Fox, PBS and others said. "This case is still in its early stages and we are confident that when the record is fully developed the rights of content owners will be protected . . . " NBC and ABC said in a separate statement. Philadelphia Inquirer; more in New York Times

Regulators on Monday launched a review of policy governing the way it enforces broadcasts of nudity and profanity on radio and television and asked for public comment on whether its current approach should be amended.

The Federal Communications Commission issued a public notice inviting comment on whether it should focus its efforts on pursuing only the "most egregious" cases in which rules are broken, or focus on isolated cases of nudity and expletives uttered on radio and TV shows. The public notice follows a Supreme Court ruling in June 2012 against a government crackdown some 10 years ago on nudity and profanity. "We now seek comment on whether the full Commission should make changes to its current (egregious cases) broadcast indecency policies or maintain them as they are," the FCC said on Monday. It asked for public input over the next 30 days on whether, for example, it should treat cases of nudity in the same way as profanity, and whether "deliberate and repetitive" use of expletives is necessary to prove indecency.

Since the Supreme Court ruling, the FCC said it had focused its enforcement on "egregious cases" and had handled a backlog of more than 1 million complaints since June 2012. The Supreme Court said that the FCC rules were vague and that it had not given fair notice of a tougher stance that resulted in three-high profile incidents that resulted in complaints and fines against U.S. networks. These included the broadcast of a glimpse of singer Janet Jackson's breast at a 2004 Super Bowl half time show. Under a 2001 FCC policy that was amended in 2004, network and local radio and television channels can be fined up to $325,000 for a single fleeting expletive blurted out on a live show or for brief glimpses of nudity. Cable and satellite operators are not subject to such rules. The FCC said that it would continue to enforce its current polices as usual during the comment period and that Monday's public notice did not alter any of its policies.

The TV industry has argued that policies have been inconsistent over the years, allowing the television broadcast of movie "Schindler's List" that includes nudity, but leading to fines against News Corp's Fox television for expletives uttered by singer Cher and reality TV star Nicole Richie on awards shows in 2002 and 2003. The most publicized case in recent years was the so-called "wardrobe malfunction" that allowed part of Jackson's breast to be briefly exposed during a half-time show for the 2004 Super Bowl football championship that drew half a million complaints. CBS was fined $550,000 but the fine was thrown out by the Supreme Court in a separate judgment in late June 2012. Reuters

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