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TheStreet Open House

Does Aereo Have Any Chance at a Comeback?

Stocks in this article: CBS DIS CMCSA FOXA TWC SNE AAPL

"The Supreme Court's holding that Aereo is a cable system under the Copyright Act is significant because, as a cable system, Aereo is now entitled to the benefits of the copyright statutory license pursuant to the Copyright Act,"  the filing read. "Aereo is proceeding to file the necessary statements of account and royalty fees."

But it may not be so easy to just get a name-change and move on, says John M. Beahn of Skadden Arps.

The broadcasters' lawyers, led by former Solicitor General Paul Clement, argued that Aereo's service was an illegal use of their copyrighted works without permission or payment. Broadcasters charge cable and satellite companies to carry their programming; Aereo circumvented this by capturing those broadcast signals and charging customers to watch them.

In their arguments before the court, the broadcasters' attorneys claimed that services such as Aereo would eliminate a large portion of the broadcasters' revenue stream and significantly undercut their business. Aereo retorted that their service is no different from consumers putting rabbit ears on their television. Rabbit ears are a free means to access the broadcasters' content, but the vast majority of Americans access it from a cable, satellite, or fiber provider, which uses monthly subscription fees in part to pay retransmission fees to the broadcasters. 

"It's fair to say they're going to have to change their business model to be able to continue to offer service," Beahn said of Aereo. "The Supreme Court was pretty clear that the current model they use was impermissible under the copyright laws." Beahn is skeptical that the company will be able to refashion itself as a cable company: "I think they've been caught with their hand in the regulatory cookie jar once, and whether they'll be able to do it twice, I don't think so."

Aereo maintains that it is simply trying to allow customers "to watch the live, free-to-air signals broadcast over public spectrum that belongs to them," Kanojia wrote in the company blog post announcing the continued legal action. Aereo has also redoubled its efforts to stir up public support, launching the Web site ProtectMyAntenna.org for supporters to take action.

"Tell your lawmakers how disappointed you are that the nation's highest court issued a decision that could deny you the right to use the antenna of your choice to access live over-the-air broadcast television," Kanojia told supporters in another blog post. "Show them you care about this issue."

The case will be decided by Judge Alison Nathan of the U.S. District Court for the Southern District of New York. If Nathan sides with Aereo, then the company can resume its operations despite the Supreme Court decision.

The broadcasters object to Aereo's shift in strategy and asked that it be prohibited from operating. 

"Whatever Aereo may say about its rationale for raising it now, it is astonishing for Aereo to contend the Supreme Court's decision automatically transformed Aereo into a 'cable system' under Section 111 given its prior statements to this Court and the Supreme Court," wrote the plaintiffs' lawyers in response.

--Written by Laura Berman in New York

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