Aereo could kill TV business model, broadcasters say

Barry Diller's upstart Aereo service, which lets paying customers record and watch over-the-air television stations online, could destroy the economic model behind television, an NBC-Universal exec said in a court filing.

Aereo is being sued by all of the major television broadcasters in federal court in New York, where the service was launched. In a sworn declaration, NBC-Universal executive vice president for content distribution Matt Bond said Aereo could alter how cable and satellite companies handle traditional TV stations. He said Aereo could let the companies pull TV stations off antennae and no longer need to retransmit them from a central location — the practice that allows TV stations to charge retransmission consent fees.

"It makes little economic sense for cable systems and satellite broadcasters to continue to pay for NBCU content on a per-subscriber basis when, with a relatively modest investment, they can simply modify their operations to mirror Aereo's 'individual antenna' scheme and retransmit, for free, over-the-air local broadcast programming," Bond said. "I know for a fact that cable companies have already considered such a model."

Broadcasters filed a number of similar declarations Wednesday in a bid for a preliminary injunction to shut down Aereo during the course of the lawsuit. If they don't get it, broadcasters are afraid cable and satellite providers will implement their own "individual antenna" systems and stop paying broadcasters, which would make broadcasters less likely to pay for programming like NFL games.

Aereo has some support in a 2008 ruling that said Cablevision's Internet DVR service didn't infringe on copyrights. But in a separate filing, broadcasters say the Cablevision case only addresses "time-shifting," as defined in the landmark Betamax case — not retransmission of over-the-air broadcasts by Aereo, which they call a "free-rider."

In their filing, the broadcasters said "there is no basis for reading Cablevision as applicable to real-time retransmissions simply because Aereo's 'device or process' employs a buffer copy and a streaming server."

If the court were to rule in Aereo's favor, they say it would allow Aereo to assert that retransmissions are private performances, which could undermine section 101 of the Copyright Act.

Bond suggests that allowing Aereo to exist could lead to widespread "cord-cutting," which could undermine cable television revenues as well as broadcast.

"Once those subscribers migrate from traditional MVPDs [multichannel video programming distributors], there is no guarantee they will come back, even if Aereo's service ultimately is found to be illegal at trial," he said.

The filings were first reported and published by The Hollywood Reporter.

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