U.S. District Court Judge Alison Nathan declined today to grant Aereo’s emergency motion to be defined as a kind of cable company — even after it said yesterday that it “will likely not survive” without a quick determination because it is “figuratively bleeding to death.” CEO Chet Kanojia warned that he’s spending about $1M a month. Without help from the court, he said, the streaming service “will not be able to generate additional revenue or additional investments.” That means “the company simply will not be able to survive and the substantial investment of time, effort, and money will be irretrievably lost.”
Aereo wants to be deemed a cable company so it can qualify for a so-called compulsory license from the U.S. Copyright Office. That would enable it to pay a relatively low, government determined fee to retransmit broadcast programming. The U.S. Supreme Court ruled in June that Aereo could not stream broadcasters’ over-the-air fare without payment, in part because it seemed to resemble cable companies that are required to pay.
But Nathan says today that Aereo’s request for an emergency decision “jumped the gun.” She will follow a longer course to determine the company’s fate. Plaintiffs have two weeks to offer a proposed order in light of the Supreme Court ruling. Aereo has up to two weeks to reply. And broadcasters can reply a week later.
Aereo declined to comment.
A delay could be important. In asking for an emergency ruling, Kanojia said Aereo would be “immediately, irreparably, and gravely harmed” without one because it is “incurring staggering costs without accruing any revenue.” The company suspended its service after the Supreme Court decision. It disclosed yesterday that it has more than 100 employees whose jobs would be in jeopardy. It also has “significant continuing obligations” linked to data centers it has built in more than a dozen cities including Boston, Atlanta, Dallas, and Houston.
He added that Aereo had spent more than $17M through mid-2012, when the District Court denied broadcasters’ request for an injunction to stop the service from doing business. Since then it has spent “tens of millions of dollars more on continued operations and expansion.” At the end of 2013 Aereo had 77,596 subscribers, it told the Copyright Office.
Yesterday, Barry Diller’s IAC took a $66.6M charge for “write-downs of certain investments,” which include Aereo.
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