Peter Kafka

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Barry Diller and Aereo Win Another Legal Battle

Another legal victory for Aereo, the Internet video startup that wants to upend the TV industry: A Federal appeals court has rejected a request from broadcasters and TV station owners to halt Aereo’s TV-over-the-Web service.

By a vote of 2 to 1, the Second Circuit appeals court denied a preliminary injunction motion filed by big media companies including Disney, CBS and News Corp. (which also owns this website), upholding an original decision from last summer. You can read the entire decision at the bottom of this post.

In essence, the court said that Aereo’s technical architecture — which pulls down broadcast TV signals from the air, stores them on a computer and retransmits them to its users over the Web, without paying broadcasters for the rights to do so — may well hold up to further legal scrutiny.

The ruling doesn’t mean Aereo’s court battles are over by any stretch, but it is another win for a company that knew from the outset that it would spend a lot of time and money on lawyers. Aereo is specifically designed to fit a legal precedent established by Cablevision, the cable TV company that won the right to create a “cloud-based” DVR for its customers a few years ago. So far that plan seems to be working.

If Aereo, backed by Barry Diller’s IAC, does end up winning in court, it doesn’t ensure that the company will succeed. But it would most definitely affect the bottom line of the broadcast TV networks, which pull in huge fees from pay TV providers for the right to show their programming. Aereo has already received overtures from pay TV providers like Dish Network and AT&T that are intrigued by the notion of bundling the company with Internet-only broadband packages, as the Wall Street Journal reported yesterday.

It is worth noting the dissenting opinion from District Court Judge Denny Chin, who doesn’t buy the Cablevision argument at all: “The system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.” We’ll have plenty of time to watch the two sides hash this out some more.

Meanwhile, if you want to see Aereo CEO Chet Kanojia demonstrate how his service actually works, here he is in action at our D: Dive Into Media conference from February.

AEREO decision

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