In our January 18  blog, we reported on the continued court battle between two major industries concerning the rights of the on-line community to retransmit broadcast network programs without paying for them.  The judicial face-off continues over its legality in courtrooms on both coasts with the newest battle lines taking the form of threats to remove network programs from over-the-air television altogether.

To refresh the reader, when Barry Diller's Aereo service began operations in New York City, subscribers were to be charged $12 per month to receive Internet transmission of network programs broadcast to thousands of micro-antennas located at Aereo facilities in NYC -- the same broadcasts that went to thousands of home antennas as well as the master antennas of all of the cable systems serving the region.  In Aereo, each subscriber downloads an app which assigns a single antenna to that subscriber and provides a typical DVR-like interface.   Lawsuits were quickly filed by all of the major broadcast companies in the NY market claiming that Aereo was taking their programming -- for which they paid producers -- without consent and without compensation.  A brief legal discussion of the arguments can be found in our January 18 blog.

Since a divided ruling by the Second Circuit Court of Appeals on April 1 denied an injunction sought by the broadcast plaintiffs, senior officials at both FOX and Univision announced that their companies may have to consider removing their programming line-ups from local broadcast stations altogether.  Both complained about "piracy" of their content without permission or compensation.  Such threats, if implemented, would be a game-changer for the television broadcast industry as it has existed since its infancy some 65 years ago.  Neither FOX nor Univision wants this result -- nor any other major network program provider -- and it could well be an opening salvo to get Congress' attention to fix what has just been found broken.

Nevertheless, the broadcast interests can be expected to appeal the Second Circuit panel decision either by requesting rehearing en banc or by petition to the Supreme Court but, also by pursuing similar complaints in other more favorable jurisdictions where Aereo attempts to roll out is service. For example, in the case of a similar service (iVi), a federal court in the 9th Circuit, following 9th Circuit Court precedent, granted an injunction stopping it in its tracks.  That injunction is on appeal.

There are several obvious solutions that present themselves here, including:

  • judicial resolution of the copyright issue at stake [but this may take years],
  • settlement [unlikely in our view], or
  • even local broadcast stations taking a cue from Aereo and not only broadcasting their local programs but streaming the network programs on the Internet as well for free [which presents numerous issues of its own].

Given the 45 million or so people that continue to receive their television service over-the-air rather than through multichannel distributors such as Comcast, Cox, Dish or DirecTV -- and that the largest percentages of these viewers are minorities -- the most likely result is Congressional action changing the copyright law to preserve the free over-the-air model which has proven fairly resilient in the face of heavy cable and telco competition over the last two decades.  Such action would also benefit 45 million potential voters.