Aereo, 'bleeding to death,' pleads for emergency help
By Jonathan Stempel
NEW YORK (Reuters) - Aereo Inc, the video streaming company that suspended service after the U.S. Supreme Court found it violated copyrights of television broadcasters, urged a federal judge to let it operate like a cable system, saying it likely would not otherwise survive.
In a Thursday night filing with the U.S. District Court in Manhattan, the startup backed by billionaire Barry Diller said it needed emergency help because it could not continue incurring "staggering costs" without having revenue come in, and required "some time" to make the necessary technological changes.
"Unless it is able to resume operations in the immediate future, the company will likely not survive," Aereo told U.S. District Judge Alison Nathan in Manhattan, who oversees the case. "The company is figuratively bleeding to death."
In an unusual order on Friday, Nathan set aside Aereo's request, saying the company "jumped the gun" by seeking relief without getting her permission first.
She instead ordered the broadcasters by Aug. 15 to draft a proposed order, consistent with the Supreme Court decision, directing Aereo not to violate their "public performance" rights. Aereo would have a chance to respond.
R. David Hosp, a lawyer at Fish & Richardson representing Aereo, did not immediately respond to requests for comment. Bruce Keller, a partner at Debevoise & Plimpton representing the broadcasters, declined to comment.
Aereo's future became imperiled on June 25 when the Supreme Court ruled that the company had infringed broadcasters' copyrights by capturing live and recorded programs through antennas and transmitting them to subscribers who paid $8 (£6.38) to $12 a month.
The decision was a victory for broadcasters including CBS Corp, Comcast Corp's NBC, Walt Disney Co's ABC and Twenty-First Century Fox Inc's Fox, which Aereo did not pay for programming.
On June 28, Aereo suspended its streaming service. It suffered another setback on July 16 when the U.S. Copyright Office said it did not agree that Aereo qualified automatically for a license available to cable systems, but would hold off on a decision until courts could address the company's status.
A federal appeals court on Thursday refused to grant Aereo an injunction, and questioned whether the company had even "properly raised" the issue of whether it was a cable system entitled to a compulsory license. Aereo submitted its emergency request to Nathan less than five hours later.
In a letter to the appeals court, Keller had said Aereo's substantive arguments should fail.
He pointed to company statements predating the Supreme Court decision that it did not qualify as a cable system, and said the assessment by the Copyright Office was consistent with a view it has held for decades.
Diller's IAC/InterActiveCorp, which invested in Aereo, on Wednesday posted a quarterly loss that included a $68.4 million writedown on investments. IAC said Aereo was the largest component of that writedown.
The case is American Broadcasting Cos et al v. Aereo Inc, U.S. District Court, Southern District of New York, No. 12-01540.
(Editing by Lisa Von Ahn and Tom Brown)
