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Aereo Case Could Set a New Precedent For Storing, Streaming Television Content

This week the Supreme Court hears arguments in American Broadcasting Company v. Aereo with its ruling likely to reverberate among cloud storage providers, cable companies, broadcast networks and television consumers.

Aereo is a web-based subscription service that charges its clients $8-12 per month to store network broadcasts and watch them on their mobile devices. American Broadcasting Companies asserts that Aereo is violating copyrights by rebroadcasting network content without paying licensing fees. Aereo contends that it is merely allowing people to record and store free, over-the-air television content and view it on their mobile devices, rather than their television set.

Drexel entertainment management professors Lawrence Epstein and Philip Salas agree that this case could be as historic as Sony Corp. of America v. Universal Studios-also known as “the Betamax case”- and 20th Century Fox v. Cablevisionrulings that set current standards for recording and rebroadcasting television content. But exactly how this case will affect the way we watch television and store data in the cloud is a matter of debate.

If Aereo wins:

“FOX and CBS have threatened to turn themselves into cable networks, eliminating their traditional over-the-air distribution,” Salas said. “This has lots of implications for owners of network affiliated stations. It also has implications for sports on TV — the NFL has contracts with both CBS and FOX, which would eliminate their “free, over-the-air” distribution if those nets were distributed via cable.”

“I don’t think that the networks will decide to go cable/satellite only in our lifetime,” Epstein said. “The blowback from Congress and the FCC would be enormous. Instead, I think cable/satellite companies will respond by offering affordable, unbundled packages that are similar to Aereo’s offerings, perhaps with some additional features that Aereo cannot provide, such as an interactive program guide or a local cable news channel.”

If ABC wins:

“The Supremes are concerned about protecting cloud storage and would write their opinion such that it is protected,” Salas said. “Barry Diller, the key investor in Aereo has basically said if they lose, they’re done. The technology, however, is still out there…”

“The Supreme Court is going to be careful not to overregulate the free market,” Epstein said. “However they rule, their decision may be based on a very narrow aspect of the case. Such a ruling would allow Aereo to live to fight another day, or perhaps create a situation where a large media company could acquire its technology and legally make use of it. Comcast, for example, as both a content and distribution company, could conceivably use the technology to distribute NBC programming to homes outside of their cable viewing area, thereby competing with DirecTV, DISH and perhaps other cable companies, while keeping Aereo’s patents away from any other potential competitor.”

The Supreme Court began hearing arguments on April 22 and will likely make its ruling over the summer.

Philip Salas, is an assistant teaching professor of television management. He has more than 30 years of experience in television research, sales and sales management. He spent 14 years at Philadelphia’s CBS-owned and operated stations as research director and in sales management positions. Salas was also part of the team that established the first market-wide unified cable sales interconnect in Philadelphia.

Lawrence Epstein is a teaching professor and interim head of the Arts & Entertainment Enterprise Department. His professional career includes 25 years in financial, technical and strategic planning roles in broadcasting management including 14 years with the CBS Broadcast Group in New York and Philadelphia, and 10 years as a senior level executive in companies serving the television industry.


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