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Ruling for networks in Aero case.

Byline: Adam Liptak and Emily Steel

WASHINGTON -- In a decision with far-reaching implications for the television industry, the Supreme Court ruled Wednesday that Aereo, a startup streaming service, had violated copyright laws by capturing broadcast signals on miniature antennas and delivering them to subscribers for a fee.

The 6-3 decision was a victory for the major television networks, which had argued that Aereo's business model amounted to a theft of their programming. The judges' ruling leaves the current broadcast model intact while imperiling Aereo's viability as a business after just over two years in existence.

The Supreme Court case comes at a crucial time in the media industry, when entertainment companies are navigating vast technological changes and rapid shifts in viewer habits. As a result, the economics of television financing and distribution are changing.

In arguments before the court in April, the broadcasters contended that Aereo and similar services threatened to cut into a vital revenue stream -- the billions of dollars they receive from cable and satellite companies in retransmission fees, the money paid to networks and local stations for the right to retransmit their programming. The networks said this revenue was so essential that they would have considered removing their signals from the airwaves had the court ruled for Aereo.

The startup contended that the service it provided through warehouses of small antennas was merely helping its subscribers do what they could lawfully do since the era of rabbit-ears: watch free broadcast television delivered over public airwaves.

Justice Stephen G. Breyer, writing for the majority, rejected all of Aereo's major arguments. He said the service was "not simply an equipment provider'' but acted like a cable system in that it transmitted copyrighted content.

"Insofar as there are difference,'' he wrote, "those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service.''

Nor did Breyer accept Aereo's argument that its transmissions were private performances because they were made one at a time.

Chief Justice John G. Roberts Jr. and justices Anthony M. Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan joined the majority opinion.

In a dissent that expressed distaste for Aereo's business model, Justice Antonin Scalia said the service had identified a loophole in the law. "It is not the role of this court to identify and plug loopholes,'' he wrote.

Justices Clarence Thomas and Samuel A. Alito Jr. joined the dissent.

Broadcasters applauded Wednesday's decision.

"We're gratified the Court upheld important Copyright principles that help ensure that the high-quality creative content consumers expect and demand is protected and incentivized,'' The Walt Disney Co., which owns ABC, said in a statement.

Paul Clement, a lawyer for the petitioners in the case, characterized the decision as a "victory for consumers'' and said the court "has sent a clear message that it will uphold the letter and spirit of the law just as Congress intended.''

Chet Kanojia, Aereo's founder and chief executive, said in a statement that the ruling was a "massive setback'' for consumers and "sends a chilling message to the technology industry.''
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Author:Liptak, Adam; Steel, Emily
Publication:Telegram & Gazette (Worcester, MA)
Date:Jun 26, 2014
Words:517
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