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Market Update

U.S. Supreme Court Sides with Broadcasters, Blocks Aereo

Author: Arjun Dave
Last Update: 11:04 AM ET June 25 2014

The U.S. Supreme Court in a landmark case sided with broadcasters and blocked the transmission of broadcast TV through Internet.

Aereo Inc, an Internet startup launched by India born Chet Kanojia and funded by Barry Diller, had expanded its Internet streaming of broadcast TV programs to several cities including New York, Baltimore, Boston, Cincinnati, Detroit, Miami and four locations in Texas.

Justice Stephen Breyer wrote the majority 6-3 decision and Justices Antonin Scalia, Samuel Alito and Clarence Thomas dissented.

The broadcasters and National Football League had argued that if one company was allowed to retransmit signals without paying license fees, other companies would soon follow.

Aereo lawyer David Frederick had argued in the court that that each subscriber receiving a signal from the small antenna attached to the computer is no different from a home antenna that is legal and does not pay for license fees.

The justices deemed the wireless digital antenna as just a ploy to get around copyright law and said that the internet retransmission should attract licensing fee.

A federal judge in Utah had found the company’s retransmission business model flawed and ordered the company to stop broadcasting six other states in February.

Federal judge in Utah had said Aereo’s business model is no different from cable companies and must pay licensing fees to broadcasters.

The Supreme Court decision could prove to be fatal for Aereo or at least force the Internet re-transmitter to restructure its business model and force it to work out a deal with broadcasters.

Aereo currently charges between $8 and $12 a monthly fee to access limited menu of 24 channels and also offer as much as 60 hours of remote storage of videos for later viewing.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc