May 30 (Bloomberg) -- Broadcasters including Walt Disney Co.’s ABC told a judge the Barry Diller-backed online television service Aereo Inc. should be shut down because it lets users view programs through the Web in violation of copyrights.
The networks sued New York-based Aereo in March, saying that it hadn’t paid to offer their programming through the Internet service, which was set to begin that month. Aero collects over-the-air signals that subscribers can tap from a video recorder for $12 a month. The broadcasters said Aereo could reduce their advertising revenue.
Aereo, during opening statements today in Manhattan before U.S. District Judge Alison Nathan, countered that consumers have a right to watch TV shows using an antenna without infringing copyrights. The trial is scheduled for two days.
“Aereo is taking the plaintiffs’ broadcast signals and reprocessing them so they can be streamed over the Internet,” Steven Fabrizio, a lawyer for the networks, told the judge. “That is a violation of copyright law.”
The broadcast networks also argued that Aereo, by transmitting programs live, is engaging in a public performance, which under copyright law requires a license. Aereo said that what it does is not a public performance.
“What the consumer is doing is playing back one unique copy solely to himself,” John Englander, a lawyer for Aereo, told the judge. “This is a quintessentially private performance.”
The broadcasters said Aereo could reduce their revenue because its audience wouldn’t be measured for ratings. Companies such as ABC and CBS Corp. charge advertisers rates based on the number of viewers who watch the programs where the ads appear. Nielsen Media Research measures the number of viewers.
“Our fear is that if this product takes off and moves beyond New York City, a substantial number of viewers will switch to it and we will lose ad revenue precisely because it is an unmeasured platform,” Martin Franks, a CBS executive, said in his testimony today as the first witness in the trial.
Aereo said in February that Diller’s digital media company, IAC/InterActive Corp., led a $20.5 million round of financing for the company. Diller, who is on Aereo’s board, once ran News Corp.’s Fox Broadcasting Co.
Chet Kanojia is the founder and chief executive officer of Aereo. He is also chairman of Navic Systems Inc., a provider of computer-programming services based in Waltham, Massachusetts. He is scheduled to testify in the trial.
The cases are American Broadcasting Cos. v. Aereo, 12-1540, and WNET v. Aereo, 12-1543, U.S. District Court, Southern District of New York (Manhattan).
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