Content is Still King! – Scotus Rules Against Aereo

Barry-Diller-AereoBy David Nelson

In a 6-3 decision the Supreme Court ruled against Aereo and for broadcasters settling a battle between the broadcast industry and the upstart company backed by Interactive Corp’s (IACI) Barry Diller.

From my vantage point Aereo, was simply exploiting a back door path around broadcast copyright protection. By assigning a customer their very own little antenna, they streamed an over the air broadcast or time shifted it attaching it to a DVR service. I get the populist appeal. We all like something for nothing or at least close to nothing and Aereo did just that. Of course they could give it to you cheaply. They don’t have writers, producers, cameramen, technicians or sound stages to build. All they have to do is put up a $5 antenna and their off to the races.

Justice Stephen Breyer wrote the majority opinion rejecting all of Aereo’s principal arguments. “We conclude that Aereo is not just an equipment supplier” the court said. Justice Scalia expressed the dissenting view joined by Justices Thomas and Alito.

I think the ruling is more of a win for content providers than it is for cable companies. If Aereo had won I believe cable would have been close behind looking for ways to reduce retransmission fees or at least gain a bargaining chip with broadcasters. For now Content is still King!

Earlier this year I posted an article writing, the major networks would Exit Broadcast TV following an Aereo win. Just go to CBS.com and you can see they are completely set up to stream content. If the decision had gone the other way broadcasters would simply have gone to a combination streaming pay-cable channel format leaving over the air broadcast to local programing and news.

The industry understands the landscape is changing as streaming becomes the preferred method of content delivery. Each year an increasing number of cable subscribers cut the cord looking to get their content exclusively from the web. This is particularly popular with millennials.

Broadcasting stocks reacted quickly to the news sending most of them up strongly for the day. CBS (CBS), the closest to a pure play was up over 6% closing at 62.48.

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As a former recording artist and songwriter I agree with the court’s decision. Aereo is nothing more than a modern day Napster which permitted the trading of copyrighted music and was forced to shut down after an injunction in 2001.

Speaking on behalf of the National Association of Broadcasters President, and former Governor of Oregon Gordon Smith said, “Aereo was a company trying to profit without paying for this very expensive content. The court’s decision seemed to center around this point. (Full Text of Court’s Decision)

The Cloud

The court went out of its way to point out that their ruling is narrow in focus. Justice Breyer specifically said the decision was limited to Aereo’s Service. “We believe that resolution of questions about cloud computing, remote storage DVRs and other novel matters not now before us should await a case in which they are clearly presented.”