Aereo Files for Bankruptcy

November 21, 2014
By: Tara Seals

Aereo has finally hung up the harness on its ride to legitimacy, filing Chapter 11 bankruptcy.

Aereo has been dark since the end of June when it lost in a U.S. Supreme Court decision in the case of ABC vs Aereo. A further nail was driven into the proverbial coffin in late August, when the U.S. Second Circuit Court of Appeals has denied it a court hearing in its pursuit to be recognized as a cable company.

The challenges in going forward “have proven too difficult to overcome,” the company's founder and CEO Chet Kanojia said in a statement.

He added, “Chapter 11 will permit Aereo to maximize the value of its business and assets without the extensive cost and distraction of defending drawn out litigation in several courts.”

Aereo went to the Supreme Court in April to defend its right to exist in the face of copyright infringement suits from every major broadcaster, which argued that because the company broadcasts local feeds via the Internet without paying retransmission fees, it's essentially stealing their content. Aereo had counter-argued that because it provided dime-sized antennae to its subscribers — who pay $8 per month for access to a couple dozen channels — it constitutes an over-the-air, rabbit ears-based service, which is exempt from retrans fees. It also argued that its content is delivered to a single cloud-based DVR device for one subscriber and can therefore not be categorized as a public broadcast service, subject to fees and regulations.

Despite mostly succeeding in its arguments in the lower courts, winning legal challenges in Boston and New York (but not in Denver), the start-up was all but dead in the water when the Supreme Court held that the company was in violation of the Copyright Act, for a variety of reasons. The case was thus returned to the lower courts.

Since then, the company has been arguing that should qualify as a cable service, which would give it the right to “must-carry” programming in return for paying retrans fees to the broadcasters that have succeeded in keeping it off the air. But the district court has opted not to hear arguments from the company.

"The U.S. Supreme Court decision effectively changed the laws that had governed Aereo's technology, creating regulatory and legal uncertainty," Kanojia said. "And while our team has focused its energies on exploring every path forward available to us, without that clarity, the challenges have proven too difficult to overcome."

Aereo operated in 11 U.S. markets before its shut-down.




Edited by Maurice Nagle