This morning, the Supreme Court ruled against Aereo, the company that had made a business of capturing TV broadcast over the airwaves for free and delivering it to cord-cutting customers on their computers. If Aereo had won the case, it would have been able to challenge the business model big broadcast networks have relied on for the past few decades: charging cable companies for the privilege of delivering popular broadcast content to cable subscribers. This revenue stream has helped underwrite the broadcasts networks’ entire business—including local network TV news stations that could easily have become collateral damage with a different case outcome.
Aereo’s business, the company argued, was renting the tiny, individual antennas it used to capture the TV signals—it wasn’t violating copyright law because it was creating a private, individual stream for each individual customer.
The Supreme Court did not buy this argument. In its decision, handed down this morning, the court argued that Aereo was, in practice, doing the same sort of run-around that “community antenna television providers”—cable companies—had managed starting in the 1940s, when they put up big antennas to capture broadcast waves and then transmitted the signal to individual homes via underground wires. The Supreme Court had actually found that this practice was legal; in the 1976 copyright act, Congress made it illegal. Today’s decision argues that Aereo’s activities are “substantially similar” to CATV and, therefore, covered by the copyright law.
It’s still theoretically possible that Aereo could continue to operate—it would just have to pay some sort (likely very large) fee to the broadcast networks, like cable companies do currently. That would almost certainly make a relatively cheap service (Aereo has charged $8-12 per month) more expensive—and Aereo has said that, if the decision went against the company, it would probably close down.
Although it was cloaked in the language of copyright law, this case was actually a huge fight between media giants about how people will watch TV in the future. Aereo was backed by Barry Diller, who helped create Fox. For him, it was a small bet on a big idea: “It’s not a big [financial] loss for us,” he told reporters today. For the broadcast networks, however, the stakes were much higher (and their stock has gone up since the SCOTUS decision went their way).
If Aereo had won this case and given cable subscribers another way to participate in the Great Unbundling of TV Content, one potential casualty was local news. Local affiliates to the big networks—ABC, NBC, CBS—depend on their motherships for both financial support and for content. If enough people were unsubscribing from cable, network might have eventually gotten out of the broadcast business altogether and abandoned their local satellites.
Local TV news has enough problems—even while attached to big networks. (On the flip side, Aereo was making the content of these local affiliates available to a younger audience not known to turn on the evening news.) With the danger from Aereo neutralized, now it’s just left with its normal challenges: declining credibility and viewership.