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Aereo Gets More Funding Despite Legal Showdown

Stocks in this article: CBS TWX CMCSA DIS FOX

NEW YORK ( TheStreet) -- Undaunted by its protracted legal battle with the country's largest media companies, the online video provider Aereo said it secured $34 million in financing this week to help continue to roll out its service in major U.S. cities, and one would expect, help to pay its lawyers.

New investors in Aereo, which streams free over-the-air programming to its customers via the Internet, include the media industry veteran Gordon Crawford as well as Himalaya Capital Management, the company said in a statement this week. Barry Diller's IAC/Interactive Corp. (IACI), Highland Capital Partners and FirstMark Capital are among Aereo's largest existing investors.

The new money comes as Aereo prepares for a possible ruling on its case by the Supreme Court. In December, Aereo acceded to broadcaster demands that the court rule on its right to retransmit over-the-air signals for a fee to its customers. The company told the court that "the need to litigate multiple cases has not only imposed a direct financial burden on Aereo but also created uncertainty that undermines Aereo's efforts to expand its footprint and further develop its business."

Despite the hangover of a decision that could scuttle Aereo altogether, the company obtained funding to help expand beyond its current footprint of 10 markets to 15 markets by the end of March.

"Customers are craving choice and options and as a result we continue to see explosive growth across all our markets," Aereo CEO Chet Kanojia said in a statement. Aereo, though, has yet to make public its subscribe numbers.

The broadcasters, which include  Walt Disney's  (DIS) ABC, Comcast's  (CMCSA) NBC, CBS (CBS) and 21st Century Fox (FOXA), want the Supreme Court to overturn a lower court decision that has allowed Aereo to rebroadcast their signals to its users. The networks argue that Aereo is stealing their content, making money off of entertainment properties that are not theirs to sell.

Aereo contends that it is simply making it easier for consumers to access the over-the-air signals which are legally owned by the public. The Supreme Court has yet to say whether it will take the case.

-- Written by Leon Lazaroff in New York.

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