Supreme Court Will Weigh Challenge to Aereo

SCOTUS' decision could change the business of television

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Bebeto Matthews / AP

Chet Kanojia, founder and CEO of Aereo, Inc., stands next to a server array of antennas in New York, Dec. 20, 2012.

The Supreme Court agreed Friday to take up a case in which major media companies are challenging Aereo, a startup that has been threatening to disrupt the television industry by streaming TV broadcasts online.

The justices will hear an appeal by companies including Disney, Fox, NBC and CBS, who say Aereo is violating copyright law by obtaining their broadcast signals without paying fees, Bloomberg reports. A lower court ruled in Aereo’s favor, but Aereo joined the broadcast companies in asking the Supreme Court to hear the case, saying that it needed legal clarity as it expands.

“This case is critically important not only to Aereo, but to the entire cloud computing and cloud storage industry,” the company said in a statement Friday.

Two-year-old Aereo is quickly growing and announced that it had raised $34 million in venture capital funding Tuesday. It picks up free, over-the-air broadcast signals using dime-sized antennas and then sends those signals to customers online for the low price of $8 per month. The startup poses a threat to TV’s years-old business model in which cable and satellite companies pay billions in “retransmission” fees (or retrans fees) to traditional broadcasters for the right to carry programming (like TV shows and live events). Aereo creates a blueprint that could potentially allow cable and satellite providers to skirt such fees, which are estimated to exceed $4 billion this year. Some broadcasters like Fox have threatened that they will turn off their traditional over-the-air signals and become cable channels instead if Aereo is allowed to continue.

Aereo is currently available in New York City, Boston, Atlanta, Miami, Salt Lake City, Houston, Denver, Detroit and Baltimore.