RIP: Barry Diller-backed Aereo ends legal nightmare forever

Cheap streaming service grabbed network TV off the airwaves, re-sold it cheaply. But it infringed on the mega-networks’ copyrights, leading to a mega-lawsuit.

Aereo corporate logo.
Corporate logo of now effectively-defunct streaming service Aereo.

WASHINGTON, April 22, 2015 – The long nightmare of the company formerly known as Aereo seems to be coming to its inevitable end. Not quite a year ago, this innovative streaming video service, which had brought its case for survival before the U.S. Supreme Court, lost its case in a June 25, 2014 court ruling.

Barry Diller and wife, designer Diane von Fürstenberg, in 2009.
Barry Diller and wife, designer Diane von Fürstenberg, in 2009. Diller was a major backer of the now-defunct Aereo. (Via Wikipedia, CC. License 3.0)

Backed by entertainment and media mogul Barry Diller’s IAC/InterActiveCorp, New York-based Aereo “allowed subscribers to view live and time-shifted streams of over-the-air television on Internet-connected devices,” according to the latest Wikipedia entry on the company. Intercepting that “free” network programming via the airwaves and then allowing its customers to stream it to the device of their choice for free seemed an interesting—and legal—end run around the networks.

Better yet, reasoned Aereo, since it wasn’t really a cable service, it didn’t need to worry about contracts with the broadcast networks since broadcast airwaves were already free to everyone else.

The networks disagreed, suing the daylights out of Aereo, which took its case to the court system in a desperate attempt to survive not only its business but the massive lawsuits as well.

The Supremes ultimately ruled that Aereo was, in effect, just another cable company, returning the case to a lower court, ultimately leading the company to suspend its service on June 28, 2014. Now devoid of income, Aereo filed for Chapter 11 bankruptcy on November 21, 2014, and TiVo purchased what was left of the failed company’s corporate carcass last month (March) for just $1 million.

To close out the transaction, Aereo also cut a deal to settle the $99 million copyright infringement suit brought against it by major broadcast networks including ABC, CBS, Fox, NBC, Telemundo and others.

The settlement turned out to be a bargain for both sides in a way, with what’s left of Aereo paying out a mere $950,000 to settle the issue. The networks themselves must be pleased, since their obvious goal all along was to wipe out the dangerous and now apparently illegal service Aereo had begun to offer to the public without the approval of the content owners.

Now it’s all over including the shouting. But Aereo’s legacy might still end up as the un-bundling of America insofar as increasingly expensive cable packages are concerned.

Professional wrestling company WWE arguably made the first real move in this direction when it started its own subscription streaming service in 2014 while continuing its lucrative arrangements with cable TV channels. HBO is soon to follow suit as are others,

Meanwhile, Verizon has unilaterally begun to unbundle its prepackaged TV offerings, offering smaller and cheaper clusters of channels to battle its own content providers’ (likely legal) unbundling schemes.

It’s becoming increasingly clear that 2014-2015 has become the pivot point for how U.S. customers obtain and pay for online, cable and/or fiber-based content and streaming media. The result, most customers hope, will be cheaper prices for à la carte entertainment clusters.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17