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Aereo Loses Challenge in Supreme Court

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Aereo, the well-financed startup backed by Barry Diller, has ended its two year journey in the U.S. Supreme Court. In a case closely watched by both the online video and broadcast TV industries, the Supreme Court ruled 6-3 against Aereo, finding that it violates copyright laws. The court agreed with broadcasters’ arguments that Aereo’s business constitutes an unlicensed public performance. Justice Stephen Breyer wrote the majority opinion, rejecting Aereo’s claims that it’s more like a VCR than a cable company.

Aereo uses miniature antennae to capture over-the-air TV signals and stream programs to subscribers or store them in a cloud DVR. The two-year-old service had been slowly adding metropolitan areas to its coverage base.

The case had dramatic implications for the entire commercial television industry, and a victory for Aereo would likely have upended the current system of retransmission fees, where pay TV operators pay retransmission fees to commercial operators to carry their content. If the Supreme Court had ruled in favor of Aereo, pay TV operators might have chosen to capture broadcast signals with their own antennas and forego retransmission payments.

Aereo had won a string of smaller legal victories against the broadcasters who challenged it, but this decision brings its good fortunes to an end. With nowhere left to appeal, Aereo’s business would seem to be over, investors are out nearly $100 million, and viewers have one fewer streaming option.

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