Aereo Halts Operations After Losing at U.S. Supreme Court

June 30 (Bloomberg) -- Bloomberg’s Alex Sherman examines the future of Aereo as the company halts service after last week’s Supreme Court decision against its business plan. He speaks on “Market Makers.”

Aereo Inc. has temporarily shut down, giving the streaming-video startup time to determine whether it has a business after the U.S. Supreme Court ruled that it violates broadcasters’ copyrights.

Aereo announced the halt in service on June 28, marking the end for now of the $8-a-month solution for cord cutters in 11 cities who used it to watch live and recorded TV from broadcasters like CBS and ABC.

“We have decided to pause our operations temporarily as we consult with the court and map out our next steps,” Chief Executive Officer Chet Kanojia said in a blog post over the weekend.

The hiatus follows a ruling from the Supreme Court, which said Aereo violated broadcasters’ copyrights by selling programming online without paying licensing fees. Broadcasters said Aereo, which is backed by billionaire media mogul Barry Diller, threatened to create a blueprint that would let cable and satellite providers stop paying billions of dollars in retransmission fees each year to carry local programming.

The Supreme Court rejected Aereo’s contention that its use of thousands of dime-sized antennas -- each sending programming to a single customer -- meant the transmissions on its system were “private” ones. The court said Aereo should be viewed as a cable provider because of the “many similarities.”

Officially, the startup’s legal status hasn’t changed yet. Under the Supreme Court’s standard practice, the justices won’t return the case to the lower courts for another month.

Continue Fighting

Kanojia had said Aereo’s work is “far from done” after the ruling. He hasn’t specified how the company would move forward.

“The spectrum that the broadcasters use to transmit over the air programming belongs to the American public,” he said in the blog post on June 28. “You should have a right to access that live programming whether your antenna sits on the roof of your home, on top of your television or in the cloud.”

With Aereo having gone dark, cord cutters -- consumers who want to ditch their cable service -- still have options to watch broadcast TV on a computer or tablet, though they can be more expensive and cumbersome.

Companies such as Roku Inc. offer alternatives to paying for a cable subscription, though require customers to buy hardware that can cost hundreds of dollars and limit users’ ability to watch live broadcast programming. For that, customers must purchase another device from Really Simple Software Inc.’s Simple.TV, which can cost as much as $350.

Other video-streaming services, including those from Netflix Inc. (NFLX) and Hulu LLC, don’t offer the live-programming options that Aereo did.

Aereo had distributed Bloomberg TV to subscribers. Bloomberg LP is the parent company of Bloomberg News and Bloomberg Television.

To contact the reporters on this story: Alex Barinka in New York at abarinka2@bloomberg.net; Caitlin McCabe in New York at cmccabe11@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Cecile Daurat

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