Aereo Defeat Sets Up Bigger, Broader Fight for TV — Broadcasters Should Prepare for a New Look From Congress

Jun 27, 2014  •  Post A Comment

By Jeanine Poggi
Advertising Age

TV networks' apparently total victory over Aereo at the Supreme Court on Wednesday isn't necessarily a long-term win for the broadcasters, observers and analysts said as the implications of the ruling settled in.

By solidifying broadcasters' ability to demand retransmission fees from any new technology that seeks to carry their signals, the Court may have also reminded Congress about an increasing complaint from constituents: out-of-control cable fees.

"While regulators and Congress may wish to see a vibrant broadcasting sector, the aggressiveness with which CBS, Fox and others stated their expectations for retransmission consent revenue expansion over the course of the Aereo dispute may yet serve to undermine broadcasters' voice in Washington, especially as cable subscription rates continue to rise," Pivotal Research analyst Brian Wieser wrote in a note. "At some point, today's rules will change, and this change could be harmful to broadcasters. A win for Aereo today could have provided some room for broadcasters to ask Congress for forms of relief in the future."

The court's decision said Aereo's technology, which allows subscribers to stream and record broadcast TV without the broadcasters' permission, infringes on networks' copyright. This may stave off other Aereo-like technology for now, but some will argue it stifles innovation.

The ruling provided no "framework for a modern definition of what TV is," said Tim Hanlon, founder and CEO of The Vertere Group, an emerging media consultancy firm.

"This sets up the next act in the drama," he added.

Justice Stephen Breyer, who wrote the majority opinion in the six-to-three ruling, said those who are worried that existing copyright law represses new technology "are of course free to seek action from Congress."

Leaders of the House Energy and Commerce Committee have already responded to the Supreme Court's decision, saying it underscores the need to rewrite communications laws.

"While the court ruled that Aereo had overstepped, invention and innovation are at the heart of America's global leadership in communications and technology development," said House Commerce Committee Chairman Fred Upton (R-Mich.) in a statement. "This case underscores the mounting need to modernize the 80-year-old Communications Act, which serves as an important, yet outdated, framework for the communications industry."

The committee is currently working on collecting input for a rewrite.

"The Court's decision reminds us that the complex communications and technology marketplace is constantly innovating and rapidly changing, and that nuances in the law can have a profound effect on content providers and consumers," added Communications Subcommittee Chairman Greg Walden (R-Ore.).

Justice Antonin Scalia, one of three justices to vote against the broadcasters, believed Aereo had successfully found a loophole in the law allowing it to legally capture over-the-air broadcast signals and retransmit and record them by assigning individual antennas to each subscriber. If the law is not meant to permit that, he wrote, it's up to Congress to fix the law. The court, he noted, came within one vote of banning the VCR 30 years ago.

"It is not the role of this Court to identify and plug loopholes," Justice Scalia wrote. "It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude 'looks-like-cable-TV' solution the Court invents today."

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