Everyone interested in the potentially precedent-setting dispute between broadcasters and the fledgling Aereo streaming service will be watching what happens at the U.S. District Court in New York beginning on Wednesday. Judge Alison Nathan will hold a hearing to consider a request by broadcasters to bar Aereo from selling subscriptions while the courts determine whether it infringes on copyrights. Industry watchers are less interested in the ruling on the injunction than they are in whether Nathan provides any signals about her feelings regarding the larger argument: Is Aereo legal? The service streams local over-the-air programming to subscribers who pay $12 a month, but doesn’t pay stations a dime. Pay TV providers are privately rooting for Aereo. If it’s legal, then cable and satellite providers could introduce similar services — and tell TV stations to go to hell if they demand huge retransmission consent fees. Everyone wants an early read. RBC Capital Markets analyst David Bank says legal expects he consulted tell him that “an Aereo victory isn’t likely, but a broadcaster victory is no slam dunk and could take years to resolve.” Broadcasters including ABC, CBS, Fox, NBC, Univision, and PBS say Aereo steals their programming without compensation. Aereo says they already give their programming away to anyone with an antenna — which it leases, albeit at a distance. Aereo launched in New York in March.
Bank says that in the unlikely event that broadcasters lost and retransmission consent revenues evaporated right away, it would shave CBS’ earnings in 2013 by 15.3% and News Corp’s by 7%. (He didn’t make a similar estimate for Disney.) On Monday the court disclosed a ruling by Nathan — who President Obama nominated to the court last year — that sided with Aereo on a technical matter: She dismissed broadcasters’ claim that the service violated New York state laws against unfair competition, on the grounds that federal copyright laws superseded the state statute.
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