Pro-Aereo Ruling Boosts Aereokiller

In case its name left any doubt, online video startup Aereokiller hopes to offer a service to rival Barry Diller's Aereo.

So it's somewhat ironic that Aereo is shaping up as Aereokiller's biggest unwitting booster in court. But whether Aereo is happy about this or not, the company's recent win in a federal appellate court in New York is providing fodder to Aereokiller in its battle to resume operations in California.

Aereokiller's attorneys say in a new court filing that the pro-Aereo ruling issued last week by the 2nd Circuit Court of Appeals “should be considered” by the 9th Circuit, which is slated to decide soon whether to lift an injunction against Aereokiller.

Both cord-cutting services have similar business models as well as technology. Aereo and Aereokiller offer paying subscribers the ability to stream over-the-air broadcast channels to iPads, iPhones and other devices. The services also offer DVR-like functionality by enabling users to “record” programs for later viewing.

Aereo and Aereokiller say they are legal based on their technical design, which relies on thousands of tiny antennas to capture the over-the-air signals and stream them to users on a one-to-one basis.

The TV networks disagree. The networks are suing both startups for copyright infringement, arguing that they engage in a public performance by streaming the TV shows. Only content owners are allowed to publicly perform a work.

But Aereo and Aereokiller say that the streams are legal, private performances because they're made on an antenna-to-user basis. So far, Aereo has won that argument and is currently operating in the New York area. Last week, the 2nd Circuit Court of Appeals ruled that Aereo's service doesn't infringe copyright.

Aereokiller, however, suffered a significant setback in court last year, when U.S. District Court Judge George Wu in the Central District of California issued an injunction banning Aereokiller from moving forward. Aereokiller is now asking the 9th Circuit to follow the 2nd Circuit's lead and rule that the streams are private performances. As of now, it's impossible to say what the California-based 9th Circuit will do. But if those judges disagree with their colleagues in New York, the issue could end up being resolved by the Supreme Court.

Meanwhile, network executives are fighting both startups outside the courtroom. On Monday, News Corp. exec Chase Carey said the company might pull Fox from the airwaves if Aereo (and, presumably, Aereokiller) prevails in court. Now, CBS is issuing a similar threat, The New York Timesreports.

It doesn't seem likely that the threats are serious -- especially given the automatic drop in ratings that would result from such a move. As of last year, an estimated 16% of U.S. homes reportedly didn't pay for cable subscriptions. Besides, as the advocacy group Public Knowledge points out, the Federal Communications Commission probably will take away the networks' rights to the airwaves if they take their stations off the air.

But the bottom line is that Aereo has already won a significant victory in New York, and Aereokiller could still win in California. And even without Aereo or Aereokiller, the numbers of cord-cutters are likely to continue to grow as people realize they can access a huge amount of online video without paying for pricey cable subscriptions.

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