Update at 1:40 p.m.: Stock prices for Scripps, Gannett and Meredith were up between one and two percent after the decision. Sinclair, the biggest owner of local stations in the country, saw its stock shoot up a breathtaking 12.88 percent on the news.
The U.S. Supreme Court handed broadcast networks and local stations a victory by ruling that Aereo cannot take TV signals and send them to phones, tablets and other platforms without paying for the rights.
The networks told the court that if Aereo was allowed to lease its antennas to users without compensation, cable companies would quickly do the same, which could cost broadcasters billions of dollars.
The Court had to dance around a few issues including how the federal copyright laws cover cloud computing. Aereo argued that if it could not lease its antennas then maybe all cloud computing could be in peril. Aereo raised the question about whether any cloud storage system could be held accountable for whether the user had the right to store whatever they were storing.
But the Court flatly refused to get drawn into that territory, saying it would consider those kinds of issues when they are the real focus of a case at hand.
In the majority opinion written by Justice Stephen Breyer, the court said Aereo is for all practical purposes identical to a cable system:
Because Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach, Aereo is not simply an equipment provider. Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, virtually as they are being broadcast. Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes. By means of its technology, Aereo’s system “receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.”
The opinion said the Court does not believe this decision will harm future technology development. In writing the opinion, Justice Breyer said:
We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us. We agree with the Solicitor General that “[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course,’ should await a case in which they are squarely presented.
In a statement, Aereo CEO Chet Kanojia vowed to “continue to fight for our consumers.” The statement also said it was “troubling that the Court states in its decision that, ‘to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress.’ … That begs the question: Are we moving towards a permission-based system for technology innovation?”
The National Association of Broadcasters President and CEO Gordon Smith said, “NAB is pleased the Supreme Court has upheld the concept of copyright protection that is enshrined in the Constitution by standing with free and local television. Aereo characterized our lawsuit as an attack on innovation; that claim is demonstrably false. Broadcasters embrace innovation every day, as evidenced by our leadership in HDTV, social media, mobile apps, user-generated content, along with network TV backed ventures like Hulu.”
The NAB statement continues, “Television broadcasters will always welcome partnerships with companies who respect copyright law. Today’s decision sends an unmistakable message that businesses built on the theft of copyrighted material will not be tolerated.”