Aereo Files for Bankruptcy Protection, Plans for Next Stage
Aereo, the Barry Diller-backed streaming service that took on the network broadcasters and lost, is back in the news. The company lost its Supreme Court case in a 6-3 decision in June, and is now filing for bankruptcy protection. Rather than simply fading away, however, Aereo is planning for Act II.
"Chapter 11 will permit Aereo to maximize the value of its business and assets without the extensive cost and distraction of defending drawn out litigation in several courts," wrote Aereo CEO Chet Kanojia in a letter to customers.
The company is still being sued by several broadcasters for copyright infringement, which makes finding new investors a difficulty. Chapter 11 would let it move past its debts and lawsuits, and focus on new strategies, which might involve a cloud DVR service. According to Aereo's filing, it has $20.5 million in cash, intellectual property, and other assets, and $4.2 million in debts. Creditors include Google and Level 3.
Aereo's bankruptcy plan will need the approval of a judge and the majority of its creditors.
Two weeks ago, Aereo announced the layoff of 74 employees, as well as the shuttering of its office in Boston. At the time, the company called the decision a cost reduction move.
While broadcasters had looked for a large payout, Aereo didn't have the money to give. The company is left with $800K in the bank.
The startup's creditors and investors can't be happy: Aereo's bankruptcy auction pulls in far less that the $4 million it was hoping for.
The Barry Diller-backed startup is being sold for parts, with its streaming video technology going to the highest bidders.
The startup is now barred from streaming live broadcasts nationwide, but could still find a business with time-shifted content.
In a 6-3 ruling, the court rejects Aereo's argument that it's more like a VCR than a cable company, forcing backers to eat their $100 million investment.
The sample size is small and the results are questionable: Could Aereo entice 4 out of 10 to drop their cable or satellite service?