Diller leads gamble on Aereo's future in high court

Next week, Aereo will be fighting with television broadcasters in court about copyright claims the plaintiffs insist that the streaming TV startup has violated. Leading the fight is 72 year-old former chairman and CEO of Paramount Pictures Corp Barry Diller.

Bloomberg said that since Diller eyed the company and had led a $20.5 million financing round for Aereo in 2012, broadcasters are alarmed at the effects Aereo's services could have on their businesses. After all, the startup's Internet service allows customers in 11 cities to watch live and recorded programs for just $8 a month.

Aereo chief executive officer Chet Kanojia told Bloomberg that it was Diller who convinced him to expand the startup's services outside New York.

He said in an interview, "True to Barry's style, when he got involved he asked me: ‘Do you think you are correct? Do you have conviction?' I said absolutely. And he said: ‘Then why on earth would you not go big?'"

Bloomberg said broadcasters like CBS Corp and Walt Disney Co's ABC had been arguing that Aereo has been infringing their copyrights and would catastrophically halt revenues in terms of retransmission fees from cable and satellite providers. Diller, on the other hand, reportedly has a goal of upending the traditional TV distribution system in favor of consumer choices, providing them the option to choose their own programming as oppose to purchasing packages that contain products they don't necessarily want.

Washington lawyer Neal Katyal, who speaks on behalf of the broadcasters complaining about Aereo's business model, said, "Aereo's business model is effectively something for nothing. It's taking content signals that broadcasters have spent billions of dollars to create and produce and market and distribute, and yanking those signals out of the air and rebundling them and selling them to people for a profit."

Kanojia rejects the argument and insists that the startup has, from the very beginning, worked on a technology that complies with the applicable law.

Diller, an Aereo board member, and others agree that the next step in the legal fight was to request for the high court to settle the matter despite the fact that there's a possibility that an unfavorable ruling could wipe out the company. Bloomberg said the Supreme Court will be hearing arguments from both parties on April 22 and will issue a ruling on the matter by early July.

Tags

Aereo, Aereo content transmission lawsuit, Barry Diller, Chet Kanojia

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